The Autumn Statement is the second-largest government announcement of the year, after the main Budget in spring. Given the looming general election, commentators expected some big political announcements in the 2014 Autumn Statement. The chancellor delivered several major points that will have been of great interest to those in the construction industry. As always, the Integrity team were watching the announcements closely. If you missed the Autumn Statement, here’s what you need to know.
- Key infrastructure investments. In the days leading up to the Statement, the government announced a £15 billion investments in the UK’s roads, in addition to the locations for the £2.3 billion in flood defences first announced last year. The Swansea Bay tidal lagoon has also been given a boost by the government. A funding plan for a new nuclear power plant at Moorside in Cumbria has been finalised. A new garden city will be built in Bicester, with 13,000 homes due to be built.
- Stamp duty. The headline announcement of the Statement was an overhaul of the stamp duty system. Previously, stamp duty had been charged on a single-slab rate, with sudden jumps in tax after passing certain thresholds. This system will be replaced with a marginal rate – buyers will pay nothing on the first £125,000 of a property’s cost, 2% for the share above that figure to £250,000, 5% between £250,000 and £925,000, 10% up to £1.5m and 12% for anything higher than that mark. This amounts to an £800 million tax cut for homebuyers, and takes effect immediately.
- Support for small businesses. The chancellor announced £45 million of assistance for first-time exporters, and the government will expand tax relief for small businesses for the building of flood defences. SMEs will also receive additional tax credits for R&D.
- The north. George Osborne announced a raft of new investments for the North of England, including new carriages on Northern Rail and Trans-Pennine Express lines.
- Other measures. The freeze on fuel duty will continue, as will business rates relief. The chancellor also pledged a full review on business rates. Business rates will be fully devolved to Wales. National Insurance on apprentices under the age of 25 has been abolished, and the personal tax allowance will increase to £10,600 – this allowance increase will also apply for high earners.
The change to stamp duty is certainly the headline announcement from this year’s Statement, mostly due to the fact that many of the infrastructure announcements had already been made. We knew the investments were coming – we just weren’t sure where the money would go. The coalition government continues to create a business-friendly environment, particularly for small businesses.
The stamp duty announcement should encourage more buyers into the housing market, which will ultimately be good news for house builders – although it remains to be seen if this will bring any significant benefits to construction companies. The announcements regarding the North of England will be welcomed by the regions, as government starts to pay more attention to areas other than London and the South-East. However, there will be some disappointment that business rates have not been tackled in the Statement, with yet another promise that a review will come in the near future.
We’ll keep covering the response to the Autumn Statement and the impact it has on construction companies right here on the Integrity Software blog.