Autumn Statement highlights
Meagre offerings. With one or two exceptions,George Osborne’s Autumn Statement was rather conservative, excuse the pun! (see The next step). Even the Taxman decided it wasn’t worth space on the front page of his website. However, we’ve picked out some of the important points we think you’ll want to know about.
Tax-free allowances. From April 6 next year personal allowances (PAs) will rise by £630 to £8,105. But there’s a corresponding reduction in the point at which you’ll pay higher rate tax; this drops by £630 to £34,370. These changes will equate to a tax saving of just £126 whether you pay basic or higher rate tax, but if your taxable income is more than £116,210 you won’t benefit at all from the increase in allowances.
NI bands. The point at which you’ll start to pay NI will increase from April 6 by £7 per week to £146. Over a year this will save you £44. For employers, the starting point for NI will go up by £8 per week to £144, which will save your business £57 per employee, per year.
Tip. Directors/shareholders who aim for maximum tax efficiency by taking a salary pitched just below the point at which employers’ NI kicks in, with the rest of their income taken by dividend, should increase this from April 2012. In most cases this will mean a salary of £7,480 per year.
Incentives. Mr Osborne also offered incentives for individuals who invest in new companies (see page 5 of this issue, yr.12, iss.6, pg.5). Plus, for businesses in defined Enterprise Zones which buy equipment between April 2012 and 2017, there will be full tax relief given for the year of purchase rather than this being spread over more than ten years (see The next step). Information on this is sketchy so we’ll bring you more details of how this will work as soon as they are available.
For a weblink to the Treasury’s Autumn Statement (TX 12.06.01A) and for the location of Enterprise Zones (TX 12.06.01B), visit http://tax.indicator.co.uk.
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