Yesterday’s autumn statement will be remembered for the Chancellor’s admission that the Government’s promise to eliminate the annual budget deficit by the next election will fail, and for the further pain that lies in store as a result.
A squeeze on tax credits aside there was little to set the pulse racing on the tax front: a deferred fuel duty rise, a small increase in the bank levy rate (necessary to raise the same amount), new tax incentives to encourage investment in start-ups and an increase in climate change levy relief were probably the most significant new announcements.
On the Low Incomes Tax Reform Group website Robin Williamson has a good analysis of the changes to tax credits. He points out that the effect of freezing all elements of working tax credit apart from the disability elements will be to reduce work incentives at a time of low growth.
The CIOT’s Tax Policy Director, John Whiting, joined the BBC website for the statement, and his analysis of the announcements has been published here. Among the few ‘rays of wintry sunshine’ that he identifies are the Chancellor’s reiteration of the planned further increase in the income tax personal allowance next year, and further cuts in the main rate of corporation tax.
Lists of announcements from the statement can be found on pretty much every news site, but two posts from Andrew Goodall on the Tax Journal website are probably the most useful for picking out the tax-specific measures, on personal tax and business tax respectively (the latter is rather longer). The Accountancy Age team have a pretty comprehensive set of articles of the tax-related announcements
Next Tuesday (Dec 6) will, of course, be much busier on the tax front, as the Finance Bill 2012 draft clauses are published and HMRC and the Treasury respond to a range of recent consultations. Tax Journal have a very helpful A-Z guide to what is expected, covering everything from CFCs to a statutory residence test. HMRC’s response to the recent Tax Agents Strategy consultation is also expected. There will be far less media coverage outside the specialist tax and accounting press but the sheer quantity of material (last year there were 532 pages of draft clauses and explanatory notes and even the overview was 147 pages!) means that, once digested, the announcements made on Draft Finance Bill day are likely to be of considerably greater significance to most tax professionals than those made in the Autumn Statement.
The CIOT’s technical team and committees will be on the case analysing these draft clauses and consultation responses as soon as they are published (though the full task will take weeks, if not months) and issuing analysis to the media, to members and via this website as appropriate. Watch this space!
CIOT External Relations Manager
Wednesday 30 November 2011