It was snowing this morning when I left home and, appropriately, there was a flurry of announcements in the Autumn statement but the question is – to stretch the metaphor - how many of these will stick? The main noise was surrounding the on-going campaign to tackle evasion and aggressive avoidance. There is a continuing conflation of these terms which makes it very hard to distinguish the correct path. HMRC has not had its budget cut and there is a promise of 2,500 specialist Inspectors in an offshore evasion unit and an expansion of the “Affluence unit” dealing with taxpayers who have a net wealth of more than £1m.
In terms of what has actually been announced today Mr Osborne announced the closure of hundreds of millions of pounds in loopholes. I have no reason to doubt his statistics, but the announcements seen so far relate very much to large corporates and promoted tax schemes. There does look like there will be a strengthening of the IR35 rules (these are the rules in the headlines relating to being employed through a service company) and a reference to a review of overseas employment intermediaries. We await further details to see if this properly targets abusive situations or impacts in the wrong places.
The introduction of the general anti avoidance rule (GAAR) was confirmed but we remain hopeful that this will not impact upon our day to day work of advising our clients to arrange their affairs in entirely legal and acceptable ways.
At a less exotic level the pension lifetime allowance will reduce to £1.25m and the annual contributions limit to £40K which will impact on many people but the drawdown limits have increased to 120%.
There were some small increases in the annual exempt amount for capital gains tax and the nil rate band for inheritance tax but a rather larger hike in the personal allowance for income tax to £9440. This means that the loss of the personal allowance (because of using the remittance basis or because overall income is above £100K) may be more of a factor in reaching decisions on the best way forward in marginal cases.
The post speech papers extend this year to a mere 93 pages but there will I suspect be very much more to consider when we see the draft Finance Bill clauses for 2013 next week. We will – of course – keep up to date with developments.
Date: 5th December, 2012
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