Fiducia Wealth Management
Posted in Inheritance Tax, SEIS on 02.12.11

The Autumn Statement

On Tuesday 29th November the Chancellor, George Osborne, made his Autumn Statement to the House of Commons.  At a time of continued crisis in the Eurozone and sluggish growth in the UK, not surprisingly the Statement concentrated on measures to curb spending and boost economic growth.

The Office for Budget Responsibility (OBR) forecast, published on the same day, does not predict a recession in the UK but they have revised down their short term growth predictions.

National Infrastructure Plan

One of the key measures designed to stimulate growth is the National Infrastructure Plan which sets out detail of over 500 pipeline infrastructure projects including investment of over £1billion to improve the national road network and tackle congestion, £1.4billion for railway infrastructure and commuter links and £100 million in the creation of up to ten super connected cities with high speed broadband and mobile coverage.  A new financing initiative will see up to £20billion invested from UK pension schemes.

Mortgages for New Homes

The Government is to introduce a Mortgages for New Homes scheme to assist home buyers to purchase new build houses and flats with a 5% deposit. House builders and the Government will help provide security for the loan.  The scheme will see the Government take on a contingent liability of up to a maximum of £1billion.It is anticipated the scheme will help up to 100,000 families and young people to buy their own home.

National Loan Guarantee Scheme

A package of interventions worth up to £21billion are to be launched to ease the flow of credit to businesses.  The National Loan Guarantee Scheme will lower the cost of bank loans by up to one percentage point for smaller businesses with turnover of up to £50 million.  Participating banks will be required to show that they are passing the benefit of the guarantee through to businesses in the form of cheaper loans.

Mid-sized businesses and SME’s will benefit from a Business Finance Partnership through which the Government will make available an initial £1billion.  The Partnership will initially focus on co-investment with the private sector through loan funds.

The Enterprise Finance Guarantee (EFG) 

This is to be extended from January 2012 to include businesses with turnover up to £44 million with a number of new lenders to be accredited to offer EFG lending.

The Corporate Tax Road Map

The Government aims to create the most competitive tax system in the G20.  The Corporate Tax Road Map sets out a series of reforms intended to give certainty to businesses.  As announced in the 2011 Budget, the main rate of Corporation Tax is to be cut to 23% by 2014, this will be the lowest rate in the G7 and one of the lowest in the G20.  The small business rate relief holiday is to be extended for a further 6 months from 1 October 2012.

Seed Enterprise Investment Scheme (SEIS)

A new Seed Enterprise Investment Scheme (SEIS) will be introduced from April 2012 to encourage investment in new start-up companies.  SEIS will provide income tax relief of 50% for individuals who invest in shares in qualifying companies with an annual investment limit of £100,000 per individual.  In addition, capital gains realised on disposal of an asset in 2012-13 and invested through SEIS in the same year will receive a capital gains tax holiday.

Enterprise Investment Schemes (EISs)

Enterprise Investment Schemes (EISs) are to be simplified with a relaxation of the connected person rules and the definition of shares that qualify for relief.  A new test will be introduced to exclude companies set up for the purpose of accessing relief and to exclude investment in Feed-in-Tariff businesses.

Venture Capital Trusts (VCTs)

The £1million investment limit per company for Venture Capital Trusts (VCTs) is to be removed.

Pension

The anticipated attack on higher rate tax relief on pension contributions and/or tax free cash entitlement did not materialise, however, there were some noteworthy announcements:

  • Basic State Pension will be increased by 5.2% from April 2012 bringing the full pension up to £107.45 per week for a single person and £171.85 per week for a married couple.
  • State Pension Age, which is to increase to age 66 by October 2020, will be increased further to age 67 by April 2028, this brings the already announced increase to age 67 forward by 8 years, saving an estimated £59 billion the Chancellor stated.  This will also affect the date at which benefits can be taken under public sector pension schemes, assuming the proposed public sector pension reforms proceed.

For motorists the 3 pence per litre fuel duty increase planned for January 2012 will be deferred until August, with the second increase planned for August cancelled.

Finally, it was announced that the annual Capital Gains Tax allowance will be frozen at £10,600 for 2012/13.

Comment

Time will tell whether the measures intended to stimulate growth will work and in large part the fortunes of the UK depend on events in the Eurozone; as the OBR warn, if the eurozone policymakers do not find a solution that delivers sovereign debt sustainability, the outcome for the UK could be “much worse”.  The delicate balancing act continues. Draft legislation for the Finance Bill 2012 is due to be published on 6th December and we shall provide analysis in subsequent bulletins.

The information contained in this document is for guidance only and does not constitute advice which should be sought before taking any action or inaction.  The information is based on our understanding of legislation, whether proposed or in force, at the time of writing.  Levels, bases and reliefs from taxation may be subject to change.

If you would like to know more about how we as Financial Advisers can help you set, plan and achieve your financial goals then financial planning section of  our website: Financial Planning or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

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Fiducia Wealth Management
Posted in Inheritance Tax, SEIS on 02.12.11