AS2012: Business benefits, but pensions cut sends wrong message
Chas Roy-Chowdhury runs through the early highlights of George Osborne's Autumn Statement
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