George Osborne disclosed his plans to re-invigorate the UK economy yesterday and at the same time, stay focussed on debt reduction. The pundits were forecasting a range of measures including: increasing the bank levy, perhaps scrapping or delaying the January 2012 increase in fuel duty and tinkering with the lower threshold for stamp duty to encourage first time buyers. Additionally the coalition also disclosed additional measures to stimulate the economy. Here’s a selection of the tax and other changes that were announced today.
|For the business community:|
|Credit easing: National Loan Guarantee Scheme
The Government will make available up to £20bn of guarantees for bank funding over two years. This should encourage banks to lend at lower rates to businesses. In his speech, Mr Osborne speculated that this would reduce average rates by 1%.
Credit easing: Business Finance Partnership
Youth employment scheme
Those still in unemployment after nine months on Job Seekers Allowance will transfer to the Work Programme that was introduced to help in the government’s key aims of fighting poverty, supporting the most vulnerable and helping people break the cycle of benefit dependency.
Additional incentives for employers include:
Additional Government funding will provide £50m a year to support disadvantaged 16-17 year olds.
Small Business Rate Relief
The present relief will be extended for a further 6 months from 1 October 2012.
Additionally there will be an opportunity to defer 60% of any increase in business rate bills for 2012-13 as a result of RPI uprating. This will be repaid equally in the following two years.
|Other boosts for the economy:|
The government is launching a £30bn plan to improve national infrastructure. The first tranche of £5bn will be provided by the government during the current parliament and a further £5bn in the next. The Treasury is to seek a further £20bn in total from the National Association of Pension Funds and the Pension Protection Fund. It is also promoting investment from insurance companies and China. The Government’s share, totalling £10bn will be funded from areas where there have been under-spends and from a crack-down on tax avoidance.
Schemes targeted for support include: the Trans Pennine Express line between Leeds and Manchester, the Tyne & Wear Metro, and improvements to M25, M3 and M56.
Mortgage indemnity scheme
Rail charges capped
Water bills in the South West
Free childcare places
Fuel duty change
|Bank levy increased
The promised increase in the bank levy is confirmed. In order to meet the £2.5bn target each year from 1 January 2012 the rate of Bank Levy will increase to 0.088%
Employers’ pension contributions
Seed Enterprise Investment Scheme (SEIS)
There is also a capital gains tax exemption for investments realised in 2012-13 and invested through SEIS in the same year.
The existing Enterprise Investment Scheme
Capital gains tax
Capital Allowances: Enterprise Zones
VAT low value consignment relief
Gifts of pre-eminent objects
|Benefits and pensions:|
Most working age and disability benefits will be increased in line with CPI from April 2012. The actual increase for 2012-13 will be 5.2%.
State Pension age change
Public sector pay