Autumn Statement and Spending Review

7th Dec 2015

With a surprise major U-turn over his intended Tax Credit cuts, George Osborne, the Chancellor of the Exchequer, delivered his joint Spending Review and Autumn Statement on the 25th November 2015.

Despite this setback to his finances, from which he had hoped to save £4.4bn in welfare costs, he still maintains that he will be able to achieve £12bn of welfare saving each year up to 2020.

His main announcements were a pledge to bring the UK’s budget into a surplus of £10.1bn by tax year 2019/20, increase spending on the NHS by £6bn in 2016, whilst defence spending will meet NATO’s recommended 2% of GDP with a total spend of £178bn over the next decade.

He will maintain the current budgets allocated to education, overseas aid, and the police force.

Housing will get a huge boost with him promising the building o f 400,000 new homes, 200,000 of which will be ‘starter homes’. House builders and developers will be offered grants to achieve this target and incentives to regenerate brown-field sites for such development.

The basic State Pension will rise by £3.35 a week to £119.30, whilst the maximum flat rate New State Pension will be set at £155.65 per week.

Automatic Enrolment pensions for all employees, will see
the proposed increase in employer contributions to 2% of payroll, pushed back from 2017-18 to 2018-19.

In future all tax returns for individuals will be digitalised and handled online by the end of the decade. As a result of this the HMRC will close 177 local tax offices.

It will be interesting to see how the predictions for the economic growth fiar over the coming months and whether the costs of the above need to be adjusted.

It is important always to seek professional advice before making any decision regarding your finances. If you would like any assistance, please contact us.