Highlights from the Chancellor George Osborne's Autumn Statement yesterday.
Note that the full list of draft legislation destined for the 2013 Finance Act will not be released by HMRC until 11 December.
Highlights of the Autumn Statement
Britain is on the right track, deficit down by a quarter, exports doubled since 2009, since 2010 1.2 million new jobs in private sector. Update of the debt reduction plan: it is taking longer than we thought, and we are now looking at four years instead of four.
Tax - new measures
Rates and allowances thresholds:
- Personal tax allowance £9,440 and basic rate limit £32,010 from 2013/14
- Higher rate threshold is not going to be aligned with inflation and will increase by 1% so that higher rate tax will not be paid until income is above £41,865 in 2014/15 and £42,285 in 2015/16
- CGT annual exemption £11,100 in 2015/16
- IHT threshold £329,000 in 2015/16
- Corporation tax main rate to be cut by 1% to 21% in 2014.
- AIA investment limit raised to £200,000 from 1 January 2013
- Disincorporation relief from April 2013
The new Employee Share Ownership Scheme is confirmed as being introduced next year
A "simpler" tax accounting system is to be introduced for unincorporated businesses
Proposals for "the taxation of controlling persons" has been dropped - HMRC already has IR35.
Small business rate relief
- Extended until April 2014
- Empty property rate relief extended
- 3p fuel tax in January 2013 cancelled
- "Loopholes" - including an income tax relief at source on patents being closed with immediate effect
- Prosecutions for tax evasion up 80%
- More resources to HMRC ensure that multi-nationals pay the right amount of tax through transfer pricing and work with OECD to ensure that companies cannot transfer profits to tax havens
- Anti-avoidance legislation for new SDLT measures
There will not be a new tax on expensive homes
Pensions and investments
- From 2014/15 the pensions lifetime allowances reduced to £1.25 million, annual investment limit to £40 million
- ISA limit £11,520
- AIM investments will be able to be held in stocks and shares ISAs
- Pension drawdown limit on retirement raised to 120%
- A 2.5% rise in basic rate pension
- A cap on benefits and increased measures to reduce fraud and errors in the tax credit system
- In general benefits uprated from 2014/5 by 1% pending measures already introduced
- New legislation on uprating benefits
- Out of work benefits uprated by 1%
- Public sector pay to rise by 1%
- Local housing rates to be capped from 2014
The economy in general
Plans re-confirmed to reduce deficit and encourage investment in UK with new support for business and enterprise.
Growth forecast from the Office of Budget Responsibility at -0.01% this year, rising to 2% next year and looking positive thereafter. Contraction in 2008-2009 estimated at 6%; the largest since Second World War. Unemployment expected to peak at 8.3%.
The Royal Mail pension fund is added to the UK's balance sheet, and the cost of the Bradford and Bingley bailout written off.
From the Bank of England "excess cash" is being passed to the Government under an asset purchase plan.
Government departments are required to make an extra 1% saving.
UK to continue to make a .7% contribution in international aid.
£5 billion reinvestment plan, so public investment as a share of GDP higher than under previous government:
- £1 billion to roads
- £1 billion loan to extend underground east
- Broadband to countryside, super-fast to small "cities"
- £1 billion to free schools and academies
- Details of the replacement to the "discredited" PFI
Mr Osborne was very careful not to talk in any detail about the taxation of multinationals - a significant ommission given the media attention and the House of Common's Public Accounts Committee's interest in those companies such as the Starbucks, Googles and Amazons questioned by MPs in November, which set up HQs in low tax jurisdications such as Luxembourg. He is keen to show that "Britain is open for business" but as benefits are cut and the pressure grows on individuals to pay their way it is easy to see that that the government are going to have to face up to the fact that there is a growing wave of resentment against those companies and individuals who are too big to bother about being taxed in Britain.