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Autumn Statement: Osborne to help SMEs and ‘squeezed middle’

by: IFAonline
  • 28/11/2011
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George Osborne is expected to crackdown on tax avoidance by the wealthy and aim help at commuters, motorists and small businesses in this week's Autumn Statement, according to reports.

Ministers will target the rich in a crackdown on a series of tax-avoidance schemes – in particular, The Sunday Telegraph understands, the avoidance of Stamp Duty on high-value property deals.

Osborne is not expected to announce plans to drop the 50p top rate of income tax on earnings above £150,000.

Rail ticket prices, due to rise by more than 8% from January, will now increase by just over 6% according to the Telegraph.

Osborne is also expected to confirm there will either be a freeze or delay in a 3p rise in fuel duty, again planned for January, though this is not certain.

Elsewhere, companies employing fewer than 50 staff will not now have to launch schemes automatically enrolling their employees into a pension from next year.

Treasury sources also confirmed a £10bn credit lifeline aimed at increasing lending to small businesses. Under the “credit easing” scheme, taxpayer cash will be channelled to high street banks to lend to small companies.

Osborne’s statement is expected to be overshadowed by further grim news on the economy, as well as by strikes planned by public sector workers on Wednesday.

The independent Office for Budget Responsibility (OBR) will on Tuesday reduce its growth forecasts for both this year and next, with the 2012 figure expected to be cut from 2.5% to 1%. This would mean Osborne missing his target of eliminating the structural deficit by 2015.

The OBR is also expected to revise up how many public sector workers will lose their jobs under Coalition cuts.

The Ernst & Young Item Club, which uses the Treasury’s economic model, now believes 500,000 public sector staff will go.

The Organisation for Economic Co-operation and Development will predict this week that Britain will slip back into recession – defined as two successive quarters of negative economic growth – at the start of next year.

In other measures expected to be included in the statement:

  • Tax credits – paid to around six million families – are likely to be frozen, with the money saved used to fund the £1bn scheme to create jobs for young people.
  • Osborne will announce moves to encourage pension funds and other parts of the private sector to fund infrastructure projects including roads, rail links, ports and super-fast broadband in a scheme worth £20-£30bn.
  • He is also expected to increase the levy charged on bank balance sheets from 0.075 per cent to about 1 per cent. The move is being brought in because of the failure of the lower rate to bring in the expected £2.5bn.







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