THE AUTUMN STATEMENT has these days become the Budget Mark 2. While I am writing this piece before being able to see the press releases, I would be surprised if even more information that was announced in the speech appears there. Added to which we will not see the draft 2013 Finance Bill until next week when there could be a further few measures slipped in to keep us on our toes.
What about the announced measures?
I doubt that the chancellor was trying to increase his popularity with the public or businesses but he did make valid reasons why he was making the "tax increases". In the case of the pensions contribution relief, it was a reduction. I cannot say it is remotely sensible to keep messing around with people's long-term plans. Pension tax relief being reduced to £40,000 per year gives out all the wrong signals to those who are trying to save in order to stay independent in old age. But in the short term, the reduced relief may potentially mean people will spend more and help stimulate the economy.
The measures against exotic tax avoidance should be welcome. The OECD work on "transfer pricing", as it were, of profits of multinationals should be welcome, together with the relentless pursuit of evaders.
The additional bank levy rate was only a matter of time. Bankers are perceived to have continued paying themselves way to much without showing that they bring any special skill set to the table, as the bailouts since 2008 have shown. That may or may not be true but we need to recognise that the UK has one large-scale world-class business activity and that is the financial sector. We dominate Europe and punch way above our weight globally. We cannot afford to push that sector away from the UK. Let's reform it and perhaps expect more tax from it, but we must not divest ourselves of it if we are to pay our way in the world.
We welcome the relentless push to reduce corporation tax now heading to 21% in 2014. This will help UK plc look like a welcome investment destination and counter the adverse international impact of the GAAR.
The SME increased annual capital allowance increase to £250,000 is highly welcome for those which can afford to invest.
The overall increase in the personal allowance to £9,440 is welcome but it should be available across all tax bands.
Chas Roy-Chowdhury is head of taxation at ACCA
I would take issue with Chas on one thing. At a time when benefits are being ruthlessly squeezed, a cut in the annual pension allowance is understandable. People who can afford to pay £50,000 a year in pension contributions are hardly those who will be vulnerable in old age.
Posted by: Guntis, 06 Dec 2012 | 11:22
I agree that restricting the annual contribution to £40k on pensions will hardly affect the vulnerable - most people I come across will be lucky to have a total pension pot of £40k when it comes to retirement !
Posted by: Richard Berry, 06 Dec 2012 | 20:17
Why do so many accountants use abbreviations? What did you mean by AS 2012. I thought it was a new Accrington Stanley 2012. On one occasion I was having a discussion with my line manager (an assistant audit manager), who kept using the term NCR. I wondered what relevancy National Cash Registers had to the conversation and he said he was talking about North Circular Road. Please don't use M and A to refer to Mergers and Amalgamations, when I am thinking of Management and Administration. I have even seen FMCG referred to as Ford Motor Company Group.
Posted by: Laurence, 07 Dec 2012 | 11:41
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