Business roughly welcomed the U.K. government’s Autumn Statement, but banks only gave a complacent response in limiting the amount of losses made by the banks in the financial crisis which can be offset against the taxable amounts on profits.
According to the Centre for Policy Studies, think tank. The credibility of Chancellor of the Exchequer George Osborne’s thrust to cut the budget deficit is entirely dependent on the new spending cuts that have still yet to be outlined.
There are still plenty of unanswered questions and the Office For Budget Responsibility is predicting that higher economic growth and higher borrowing this year would result in lower growth and lower borrowing in the following years. This shatters all the typical economic rules.
The Confederation of British Industry said that business would be moderately pleased with measures as an overhaul of business rates and stamp duty and proposals to bolster innovation was implicated.
There are cautious responses circulating to curb the amount of losses made by the banks in the financial crisis that can be offset against tax on profits to above 50 %. The proposals meant that banks would need to contribute roughly £4 billion more in tax in the next five years than what was otherwise would have been done.
The banks were able to contribute more than £25 billion each year to the nation’s public finances which were enough to pay the wages of approximately half a million nurses. It is absolutely right that this vital industry pays its fair share of tax, however it is equally important to note that where banks have offset losses, the same has been done so legally, just as all other businesses can.
The U.K. offshore oil and gas industry will be getting an instant reduction of 2 % points in its tax rate, the first cut in tax rates for the U.K. North Sea in more than two decades.
The industry presently pays taxes on oil and gas production at special rates between 62 % and 81 %. The move will significantly reduced the aforementioned figures to 60 % and 80 % respectively.
These can only be regarded as first steps towards improving the overall fiscal competitiveness of the U.K. North Sea. There will certainly be further reductions in the overall rate of tax to ensure the long-term future of the industry.
The Engineering Employers Federation (EEF) welcome measures which includes strengthening of R&D tax credits and tax cuts on young apprentice workers. Investment in science and a boost for infrastructure were very helpful measures on the road towards aiding the economy back to its balance.
The current system of business rates were able to provide stability and certainty for manufacturers, specifically those making investments over the long term. The recent announcement of fundamental reform of the system is hence, a disappointing status that will introduce a period of uncertainty which would knock business investment in the short term.
The plan is to increase annual charges for non-domiciled people resident in the U.K. for more than 12 years. The introduction of a new extension capital gains tax, which for the very first time in the U.K., will be imposed on such properties in the U.K. despite if they don’t live in the U.K. Non-residents. Those who are not living within the U.K. will also be affected with a new rule which makes it tougher for them to claim exemption on their main U.K. residences.
The measures along with the proposed increases in the top rate of land tax and stamp duty may confuse and deter wealthy foreign individuals from investing and living in the United Kingdom due to the complexity and uncertainty of which tax will be expanded for the elite percentage of the wealthy people.