Autumn Statement 2012: key announcements summarised
Chancellor George Osborne has delivered his 2012 Autumn Statement to the House of Commons. Here’s a quick round-up of the key announcements, with more in-depth analysis to follow.
UK growth forecasts
The Office for Budget Responsibility (OBR) has downgraded its growth forecast for the economy to -0.1 per cent in 2012. The OBR’s Budget 2012 estimate was that the economy would grow by 0.8 per cent this year. The economy is now expected to grow by 1.2 per cent in 2013, 2 per cent in 2014 and 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017.
The personal tax allowance will rise by £235 in April 2013 to £9,440.
The threshold for the higher 40 per cent rate of income tax will rise by 1 per cent in 2014 from £41,450 to £41,865 and then to £42,285 in 2015.
The main rate of corporation tax is to fall further than expected from 22 per cent to 21 per cent from April 2014.
Annual investment allowance (AIA)
The AIA – a 100 per cent relief on plant and machinery investment – will increase from £25,000 to £250,000 for two years to support small and medium sized businesses.
The maximum annual tax-free pension allowance will decrease from £50,000 to £40,000 and the lifetime allowance for pension contributions will decrease from £1.5 million to £1.25 million from 2014/15.
The basic state pension will also increase by 2.5 per cent, a rise of £2.70 a week in 2013/14.
The planned 3p rise in fuel duty in January 2013 has been cancelled.
Funding of £5.5 billion will be invested into infrastructure and support for businesses. This will include road and rail improvements, more flood defences and ultrafast broadband in 12 major UK cities.
Capital gains and inheritance tax
The annual amount exempt from capital gains tax will increase by 1 per cent to £11,100. The inheritance tax nil-band rate – currently frozen at £325,000 – will increase by 1per cent in 2015-16.
There will be no increase in stamp duty.
The annual Individual Savings Account (ISA) allowance will be uprated to £11,520.
Small business finance
The Business Bank, designed to increase lending to small firms, will be backed by £1 billion.
Around £1.5 billion will be given to UK Export Finance to provide loans to small firms who export.