With the Autumn Statement set for Thursday 5th December, what business-related changes do industry experts expect the Chancellor to announce?
In recent years, the Statement has come to be regarded as a ‘mini Budget’, and has been used to announce significant policy changes, as well as providing updates on the health of the UK economy.
Clearly, George Osborne will be feeling fairly upbeat given the recent upturn in the economy, with predicted growth expected to be significantly upgraded for the current year.
Here are some of the key areas which may receive the ‘Osborne treatment’ on the 5th:
Alex Henderson, Tax partner at PWC believes that the Chancellor may seek to continue his drive to reform corporate taxation; the main Corporation Tax rate may be cut further, and corporate tax reliefs (such as the Patent Box) may be extended. On personal tax, Henderson expects to hear a lot more about anti-avoidance measures – including the forthcoming GAAR (General Anti-Abuse Rule).
“What’s for certain though is that his room for manoeuvre will be limited. If he gives with one hand, he’ll take away with another.”
ISAs and Pensions
George Bull, senior tax partner from Baker Tilly suggests that the Government may place a lifetime cap on Individual Savings Accounts (ISAs), possibly at £100,000. Bull also believes that pension contributions are unlikely to remain unscathed, with pension benefits drastically reduced in recent Budgets.
From April 2014, the annual tax-free pension contribution amount has been cut to £40,000, and the lifetime limit has also been reduced to £1.25m.
According to Bull, the Government may use the Autumn Statement to announce a new limit on how much of a pension can be paid out as a tax-free lump sum after the age of 55.
“This will be a particular blow to those relying on a larger sum, for example, to start their retirement early.”
Tax avoidance by partnerships
Bull also expects to see significant announcements on tax avoidance – including the ‘naming and shaming’ of people who ‘promote’ artificial tax avoidance schemes.
The Chancellor may also be taking aim at ‘tax avoidance’ by individuals who have registered as self-employed members of partnerships, where they should really be classified as ’employed’ for tax purposes if they have not put any of their own capital at risk. This measure could affect a wide range of middle-class professionals, including accountants, estate agents and law firms.
Bill Dodwell, from Deloitte, told the Telegraph; “If they don’t deal with this properly then I do think it’s fairly damaging for the smaller part of Britain’s professional partnerships.”
Other measures which may be included in Thursday’s Statement (some having been pre-announced) include:
- Further details on a new ‘married couples’ allowance’, which is likely to take effect from 2015.
- The Government has pre-announced its intention to tax non-residents on any capital gains made from property in this UK.
- Given the current furore over energy prices, the Chancellor may announce a populist measure to match the ‘bill freeze’ plan announced by Labour.
- Will the current stamp duty regime be reformed to allow property purchases to be taxed in a similar way to income, rather than at a flat rate when you cross one of the current stamp duty thresholds?
For background, and updates on the day, visit the GOV.UK Autumn Statement home page. We’ll publish a summary of the key points on Thursday.
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