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Autumn Statement - 5 December 2012

The Chancellor has now delivered his Autumn Statement to Parliament, and the main announcements which will affect HM Revenue & Customs (HMRC) customers are highlighted below.

More information can be found on the HM Treasury website (Opens new window).

Further documents will be published on 11 December including draft clauses for Finance Bill 2013, Tax Information and Impact Notes and Responses to Consultation on Budget announcements.

On this page:

Personal Tax/Benefits and Credits

  • For the tax year 2013-14 the Personal Allowance will increase to £9,440 and the basic rate limit will be set at £32,010.
  • For 2014-15 and 2015-16 the increase in the higher rate threshold will be capped at 1%.
  • Child Benefit rates are frozen in 2013-14 and will increase by 1% in 2014-15 and 2015-16.
  • Tax credits disability elements are increased in line with Consumer Price Index (CPI).
    Other elements are either frozen or will increase by 1% in 2013-14.
    All rates are increased by 1% in 2014-15 and 2015-16.
  • Guardian's Allowance is increased in 2013-14 in line with CPI.
  • For 2013-14, there are no changes to the percentage rate of contribution for Class 1 and Class 4 National Insurance contributions (NICs) but there are changes to all of the thresholds and limits.

All of the rates are shown in the tables published (PDF 101K) (Opens new window)

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Pensions Savings - Tax Relief

For tax year 2014-15 onwards:

  • the annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000
  • the standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million
  • a transitional 'fixed protection' regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance

Legislation will be introduced in Finance Bill 2013 to make these changes and will be published in draft on 11 December 2012.

The Government also announced that they will discuss with interested parties whether to offer a personalised protection regime in addition to a fixed protection regime.

Pensions Restriction of pensions tax relief-Overview Note (PDF 64K)

This note provides further information on the changes including contact details for questions.

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Business Tax

  • In addition to the Budget 2012 announcement, the main Corporation Tax (CT) rate for Financial Year (FY) 2014 will be reduced by a further 1% to 21%.
  • As already announced, the main CT rate for FY 2013 is 23%. The Small Profit rate for FY 2012 is 20%, and the rate for 2013 will be announced at Budget 2013.
  • The Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing from 1 January 2013.
  • A simpler income tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow:
    • Eligible self employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business.¬†They will generally not have to distinguish between revenue and capital expenditure
    • All unincorporated businesses will be able choose to deduct certain expenses on a flat rate basis

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Other Taxes - Fuel Duty, Air Passenger Duty (APD), Inheritance Tax (IHT)

  • The 3.02 pence per litre fuel duty increase that was due to take effect on 1 January 2013 will be cancelled and the increase that was planned for 1 April 2013 will be deferred until 1 September 2013.
  • APD rates will increase by the Retail Price Index increase for September 2012 from 1 April 2013.
    All of the rates are shown in the tables published (PDF 101K) (Opens new window).
  • The IHT nil-rate band was frozen at Budget 2010 at its current level of £325,000 until April 2015. For 2015-16 the band will be increased by 1% rounded up to £329,000.

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Anti Avoidance and Evasion

HMRC's approach to closing in on tax evasion was launched on Monday 3 December.

Details can be found at Tackling Tax Avoidance and Evasion

Five further measures have been announced in a Written Ministerial Statement (PDF 131K) (Opens new window). They have effect from today, 5 December 2012. These cover:

  1. Foreign bank levies - which are not allowable deductions for Income Tax or Corporation Tax purposes.
  2. Tax mismatch scheme - which reduce Corporation Tax liability through asymmetric tax treatment of loans or derivatives.
  3. Property return swaps - which convert capital losses into income losses.
  4. Manufactured payments - where schemes involve stock lending arrangements.
  5. Payments of patent royalties - relief for non trade payments to be abolished.

The following documents which include the Tax Information and Impact Notes (TIINs), draft legislation and explanatory notes have been published.

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Other Announcements

Reducing tax credit error fraud and debt

A number of initiatives have been announced aimed at reducing the levels of tax credit error and fraud and recovering tax credit debt. They include:

  • Requiring claimants to provide more evidence to support tax credit claims for children and childcare
  • Trialling the use of debt collection agencies to collect tax credit debt
  • Changes to enable the collection of exisiting tax credit debt from a new tax credit award.

Recovering Debt

New initiatives aimed at recovering debt owed to central government include:

  • Trials and pilots with the Department of Work & Pensions and Debt Collection Agencies.
  • An increase to HMRCs debt management resource for the rest of this year and for 2013-14.

Digital Services

Over the next three years, HMRC will significantly expand the range of digital services to include:

  • 20 million taxpayers will receive a Personal Tax Statement, showing how their tax is calculated and spent by government, and
  • A more joined-up digital experience for our business customers, providing an overview of their HMRC 'account', links to all their online transactions and a facility for accessing tailored help and asking HMRC questions. These services will also be made available to tax agents to use on behalf of their clients under the proposals in the Tax Agent Strategy.

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