Autumn Statement 2014- what's going to be in it?
So, after Black Friday last week and Cyber Monday today, you could be forgiven for thinking all fun and excitement was over for another three and a half weeks or so. That's just not true. On Wednesday 3rd Dec at 12.30pm (after PMQs) Chancellor George Osborne will deliver his Autumn (Winter) Statement, and it’s bound to be full of Christmas cheer.
Under the last Government, this statement used to be called a Pre Budget Report, and it often contained new tax measures that everyone accountants got excited about. However, the true point of the Autumn statement is to provide us, the electorate, with an update on the country’s economic progress, which must be given to us at least twice a year, the other time being normally during the Budget.
This year’s Autumn statement will include new fiscal forecasts, described by some as “bleak” from the Office of Budget Responsibility (OBR). Collapsing revenues from oil sales, stamp duty and income tax mean the Chancellor is likely to have to admit his deficit-reducing recovery plans are, well, not going to plan.
Borrowing is also expected to be revised upwards by the OBR, with the cumulative deficit expected to reach nearly £280bn by the end of the decade – £75bn more than expected. The Government has already had to borrow £3.7bn more in the first seven months of this year. The slowing housing market is also likely to mean the anticipated £12.7bn predicted income from stamp duty takings will be lower- which will cause the Chancellor a problem, as he has already notionally spent the cash.
But people are generally most interested in how the facts and figures are going to affect them personally. In addition to news about NHS funding and infrastructure (like a new tunnel under Stonehenge), we can make some educated guesses as to the interesting content of the statement. Note that, as the last Autumn Statement before a general election, there are unlikely to be any nasty surprises, but given the incontrovertible economic position, neither can the Chancellor be too generous.
Details of new Pensioner Bonds from NS&I are likely to be doled out, as well as announcing new postgraduate student loans, similar to those currently available for undergraduates, presumably to give all those unemployed graduates something useful to do.
Although it's possible that the Chancellor will consider crowd-pleasing uplifts to tax rates and personal allowances, it’s probably not going to happen. Far better to save such things for party manifestos , where such promises can get ‘overlooked’ while you get down to the serious business of governing (£1m inheritance tax allowance promise eh Mr Cameron?).
It has been previously announced income tax will be raised from £10,000 to £10,500 from April 2015 at which point the threshold at which taxpayers start to pay the 40% higher rate will increase by 1% from £41,865 to £42,285, something that has not happened in recent years. This means that, in 2015/16, basic rate taxpayers will be £100 better off and higher rate taxpayers up by £184.
But one giveaway that might be coming, especially in the light of a drooping housing market, could be a reform to stamp duty. At present, buyers in England and Wales face a massive hike in tax burden if they pay just £1 above the stamp duty threshold. For example, buying a property at £249,999 means a tax bill of £2,500, but buying a property just a couple of quid more expensive means a tax bill of more than £7,500.
The Building Societies Association has urged the chancellor to make the payment more progressive, so that you pay the higher rate only on the amount above the threshold. This would be an ‘easy’ giveaway for the Chancellor, according to the ACCA.
As ever, the exact content of the Autumn Statement will have to remain a mystery until Wednesday when we will see what advent treats are coming our way.