Autumn statement 2014: more than an awards ceremony?

George Osborne delivers the Coalition’s final Autumn Statement in the House of Commons on 3 December. We reckon he’ll use this opportunity to remind us of the economic achievements of the Coalition, but will there be carrots promising reductions in future tax bills?

By good fortune or good judgment, the UK’s economic performance is top of the class. So expect much to be made of this success, backed up by lots of statistics. All the same, watch out for the way Mr Osborne covers the slowness of the reduction in the deficit. Government expenditure remains stubbornly higher than income. There are two challenges for this statement. The first: to balance optimism from greater than expected improvement in economic activity with containing expectations that there’s an imminent easing of the squeeze on government expenditure and need for healthy tax revenues. The second: how can the two parties of the Coalition each make their own distinct proposals in what is a single statement?

Given the little room he has to play with, what do we expect on tax changes?

A lot of recycling of already publicised changes. We’ve already been told about a lot of the content of next year’s Finance Act. Expect to hear about:

  • an even greater crackdown on tax avoidance, those who have used schemes who “can pay but won’t pay” the tax they’ve claimed to save, strengthening and widening the disclosure of tax avoidance schemes rules, and  targeting rogue advisors;
  • increased powers for HMRC to tackle tax evasion, such as controversial plans to create a new ‘strict liability offence’ for those who fail to declare their offshore income and gains, and to take money directly from people’s bank accounts without the need for court approval;
  • the £2000 per annum NI saving that every separate business is already benefitting from;
  • the elimination of employer NICs from next April for all employees under 21;
  • proposals for the changes the Government will make to its tax incentives for patents to comply with the joint UK/German commitment to reduce distortive tax incentives;
  • a recap on the radical upheaval and reform of the rules on taking benefits from personal pensions – the pension freedoms;
  • breaks for small businesses, for example business rates reliefs and improving access to venture capital reliefs;
  • yet more changes to north sea oil taxation triggered by the precipitous fall in the wholesale price of crude oil.

Some ideas may be included by the chancellor in his Statements unless the Lib-Dems insist that they be relegated to next year’s election manifestos:

  • even more above-inflation increases to the income tax personal allowance;
  • increasing the inheritance tax nil rate band from £325,000 to £500,000 to take couples out of the tax if their assets on death are less than £1m;
  • increasing the point at which individuals start to pay the 40% tax rate (this should make it as a joint proposal, being trailed in this year’s budget).

And what’s unlikely to be mentioned, but perhaps should be:

  • easing the burden of national insurance on the very low-paid;
  • increasing duty on petrol and diesel (these most recent increase was in January 2011, but that was then more than reversed by a reduction in March 2011 but the fall in global oil prices means the Treasury is losing revenue there as well);
  • an easing of the rates of air passenger duty

Check back here or follow us on twitter to get the latest on the Autumn Statement from December 3rd.