As the 5th looms closer, there has been increasing speculation as to what the chancellor’s autumn statement may bring. Whether he will take a disciplined stance or one filled with subsidies and giveaways, remains to be seen. It is an advantageous position for Mr Osborne to be in as this economy is in its strongest state since the coalition took over. How he plans to advance from here, is up for speculation.
With a variety of proposals being considered, here’s an overview of some of the key policies that may change:
A policy that will be particularly popular with the public is a crackdown on tax avoidance schemes with the brunt force hitting the advocates of such schemes and users also facing a penalty. With an investment of £154 million into HMRC in an attempt to recoup around £10 billion from such schemes, critics will be overjoyed at the prospect of a huge return on investment.
However, Osborne is expected to continue his reduction in corporation tax, in an effort to encourage further investment. His hopes of this tax relief scheme will encourage corporations to continue to operate a vast amount of their business operations in the UK.
The chancellor also appears to be attempting to aid the SMEs of the UK by looking to reduce business rates allowing companies to take out loans at a reasonable rate.
Another key policy that has many accountants talking is the tax break for married couples, as many see it as a backhanded benefit. Many have pointed out that by accepting the tax cut, couples succumb to a loss of benefits. To add to that, the couples must also complete a complicated self-assessment tax return to even receive the benefit. The cut would cost around £700 million and there are already disputes as to how effective such a tax cut would be especially when integrated with other policies. In short, an increased tax cut would lead to an increase in pay. Such an increase in pay reduces benefit entitlement and as a result may reduce their universal credit.
With the personal allowance rising to £10,000 as of April 2014, the Liberal Democrats are pushing for a further increase to £10,500 for April 2015 and further incremental increases of 1% in subsequent years.
Fuel duty is generally an area that is subject to change, however this year, many would be surprised if there wasn’t a change in the planned 3p per litre rise expected in January, due to the increasingly high prices. Most expect this to be frozen or simply cancelled.
The current housing crisis is something that the chancellor must address as it currently appears that the market is a key buoyancy aid in the economic recovery as opposed to the austerity measures put in place by the coalition.
As we’re on the brink of a recovery, and one which must remain sustainable, it would appear bizarre for the chancellor to opt for a route against his own policy. Especially as his austerity measures have been “supposedly” working so far. However, If they go against their own policy, the public may question the coalition’s trust worthiness as well as their own policy. But to counteract this issue, Mr Osborne may hope that the loosening of the purse strings and incredible benefits may eclipse his decision to favour his political needs over the economic needs. Logically, it would make sense for the chancellor to disciplined and follow his approach of austerity.
But with an election on the way, will his political demand overbear the needs of the economy? Will he sacrifice his measures in an attempt to win greater affection from the public? Will the public warm to the decisions made by George Osborne, or will they cause a stir? We can only wait and see.
