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More Tax Help For Business In UK 'Mini-Budget'

by Robert Lee,, London

07 December 2012

George Osborne, Chancellor of the Exchequer in the UK, has delivered an Autumn Statement outlining tax changes for businesses and individuals during 2013 and 2014 and beyond and promising to crack down on tax avoidance.

Tax measures affecting business include a further 1% cut in corporation tax in 2014, bringing the rate down to 21%, and a temporary increase in the Annual Investment Allowance (AIA), which is a first-year allowance for business expenditure on almost all plant or machinery (apart from cars). AIA will be raised from GBP25,000 to GBP250,000 for two years.

Further, fuel duty will remain frozen until September 1, 2013, canceling an increase of GBP0.03 per liter that had been planned for the start of next year.

For personal taxpayers, the personal income tax threshold has been raised GBP235 higher than had been previously announced, bringing the personal allowance for 2013-14 up to GBP9,440. The higher rate threshold will increase by 1% in 2014-15 and 2015-16, rather than rise in line with inflation. Working-age benefits and tax credits will be uprated by 1% for three years from April 2013 (excluding disability and carers benefits).

From 2014-15, the lifetime allowance for pension contributions will be reduced from GBP1.5m to GBP1.25m, and the annual allowance reduced from GBP50,000 to GBP40,000.

The chancellor also promised the closure of tax loopholes and to target promoters of "aggressive" tax avoidance schemes. He announced the creation of a dedicated unit at HM Revenue & Customs to tackle offshore tax evasion. Osborne also confirmed that a general anti-abuse rule would be introduced next year.

Obsorne's statement, dubbed a "mini-budget," also included a GBP5.5bn "infrastructure package"; a GBP1bn "Business Bank" for smaller businesses; GBP1.5bn in loans to finance exports by small firms; and increased funding for trade and investment promotion.

Also, the basic State Pension will rise by 2.5%.

Osborne explained that GBP5.5bn for infrastructure investment and business would be made available from cuts to "welfare, overseas aid and Departmental spending." Also, the overall level of public spending (the "spending envelope") for 2015-16 will be consistent with an announcement in 2011 that spending for 2015-16 and 2016-17 would continue to fall at the same rate as the Spending Review 2010 period.

According to the statement, the tax measures are designed to "support growth, reward work, help with the cost of living and ensure that those with the most contribute the most."

TAGS: tax | investment | business | tax avoidance | budget | corporation tax | United Kingdom | tax credits | offshore | tax rates | individual income tax

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