Autumn statement’s impact on business

IN HIS autumn statement Chancellor George Osborne emphasised the improved economic conditions and announced that economic growth forecasts for this year have more than doubled from 0.6 per cent to 1.4 per cent.

However, he warned that the job is not complete and emphasised the importance of achieving a ‘responsible recovery’ by continuing with the austerity plan.

For businesses, the Chancellor offered an extension of small business rate relief for a further year.

In addition, a new 50 per cent ‘reoccupation relief’ will be available to local retail businesses, and a rates discount of up to £1,000 will be applied to some small shops, pubs and other retail properties.

Another key announcement was the scrapping of employer National Insurance Contributions for most under-21s, from 2015.

The Chancellor also announced that the intermediaries legislation will be tightened further to prevent employers and employment intermediaries circumventing employer obligations as regards taxation and employment law.

The Chancellor also confirmed that proposals to tackle elements of partnership taxation avoidance will go ahead.

This addresses limited liability partnerships (LLPs) using their tax status to disguise employment relationships by making an employee a member of the LLP to remove the employer NIC cost.

Additionally, some partnerships have partner-owned corporate partners which receive profit shares, with the result that tax on undrawn profits would be subject to a much lower rate and overall tax liability. The new rules apply from December 5, 2013.

Finally, there have been cases of losses being allocated to an individual partner, instead of a non-corporate partner, to enable the individual to access certain loss reliefs. This will also be tackled.