There are a couple of key themes arising from today’s Autumn Statement and Spending Review, but overall the tax agenda is very much a populist one.
Commentating on tax announcements in today’s Autumn Statement, Chris Morgan, Tax Partner at KPMG in the UK, said:
“There are a couple of key themes arising from today’s Autumn Statement and Spending Review, but overall the tax agenda is very much a populist one. The Chancellor is raising nearly £21billion of extra tax over the Spending Review period – largely from large business with the apprenticeship levy and increasing stamp duty on additional residential properties - while relaxing the welfare squeeze by just over £5billion.
“Focusing on the main tax themes, the first bucket of tax changes is that of devolution and the spreading of government powers across the UK, while the second looks at encouraging enterprise and helping the aspirational.
“The Chancellor’s statement devolves greater powers to local councils across the UK who have been granted the flexibility to add up to 2% on local tax rates to be used for social care. This is on top of being able to keep the money collected from business rates by 2020 as already announced, as well as a new announcement that they can keep 100% of monies collected from the sale of council-owned properties.
“Added to this, Northern Ireland will be given powers over corporation tax and it is expect will reduce the rate down to 12.5%.
“Today’s Autumn Statement also offers help for those that arguably need it the most; small businesses, jobseekers and first-time buyers.
“The flagship announcement today, was the reversal of cuts to tax credits. This, coupled with the previously announced National Living Wage due to be implemented in April 2016, should leave the lowest earners better off.
“For jobseekers, the apprenticeship levy previously announced, adds 0.5% to employers’ payroll above £3million which will be used to fund the creation of 3 million new apprenticeships by 2020.
“The Chancellor also announced a package of measures intended to provide enterprise help. These include an extension to the small business rate relief for 600,000 small businesses as well as the expansion and creation of 26 dedicated enterprise zones across the UK.
“Finally, for those aspiring to get a foot on the property ladder, the help to come from the 3% extra stamp duty on additional residential properties to will be welcome.
“Overall, the Chancellor looks to be redistributing opportunity, wealth, and power, but it’s to be hoped that the extra complexity that these moves will create does not result in too much of a drag.”
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