In this afternoon's Autumn Statement George Osborne uttered the word 'tax' 49 times, compared with 24 times last year, but was at pains to say the Statement was fiscally neutral. The reason for this apparent contradiction is that Coalition tax policy has come to be dominated by the concept of fairness as the Chancellor battles to reduce the country's budget deficit through spending cuts. The shifting of the burden of tax onto the more wealthy and a crackdown on tax evasion and aggressive tax avoidance is being used as a counter-balance to reduced investment in public services and welfare. More detail of the tax developments will be available when draft legislation for the Finance Bill 2013 is published on 11 December but the key points from the statement are as follows:-

Personal tax rates

  • Income tax personal allowance increased to £9,440 from April 2013
  • Higher rate threshold for income tax will be increased by less than inflation in 2014/15 and 2015/16 (£41,865 and £42,285)
  • Capital gains tax annual allowance will also increase by less than inflation in those years
  • Inheritance tax nil rate band will at last increase, but only in 2015/16 and only to £329,000 (currently £325,000)
  • ISA allowance to be increased to £11,520 and the scope of eligible investments possibly extended to AIM shares

Residential property taxation

  • No new mansion tax but...
  • ... measures previously announced to prevent the avoidance of SDLT will go ahead so we expect to see changes to the taxation of residential properties owned by non-natural persons confirmed next week

Pensions and employee shares

  • Annual allowance reduced from £50,000 to £40,000 from 2014/15
  • Lifetime allowance reduced from £1.5m to £1.25m from 2014/15
  • Confirmation of employee share plans, whereby up to £50,000 of shares acquired by employee shareholders will be exempt from capital gains tax with some relief from income tax and NICs on the award of the shares.

International tax issues and tax avoidance

  • Confirmation of the introduction of a General Anti-Abuse Rule with draft legislation and a consultation document due next week
  • Increase of resources to monitor tax compliance by multi-nationals and efforts through the OECD to prevent the avoidance of tax by multi-nationals
  • Further reinforcement of HMRC's resources for the tackling of tax evasion with the publication of a comprehensive offshore evasion strategy due in Spring 2013
  • UK has agreed with the US to introduce legislation enabling the Foreign Account Tax Compliance Act to have effect in the UK, in return for reciprocal information rights for the UK in relation to US bank accounts
  • The immediate closure of three loopholes involving the avoidance of corporation tax using financial products and the withdrawal of income tax relief for payments of patent royalties by individuals to prevent abuse
  • Measures are expected to prevent the use of partnerships to avoid tax on non-partnership income
  • New information disclosure and penalty powers targeting promoters of tax avoidance schemes

Business taxation and commercial property

  • Reduction in the main rate of corporation tax to 21% from April 2014
  • Doubling of small business rate relief extended for a further twelve months from April 2013
  • Empty property rates relief lasting 18 months for any new build commercial property constructed between October 2013 and September 2016
  • Increase in Annual Investment Allowance for qualifying investments in plant and machinery from £25,000 to £250,000 for two years from 1 January 2013
  • Enhancements to proposed tax relief for video games, animation and high-end television industries
  • Increase of Bank Levy rate to 0.103% from 1 January 2013

Charity

  • Confirmation that the new cap on income tax relief will not apply to charitable reliefs
  • Minor enhancements to the new Gift Aid Small Donations Scheme which will allow charities to claim gift aid on very small donations without a gift aid declaration being completed

Other measures of interest

  • Fuel duty rise of 3.02% cancelled
  • Rail fare increases capped at RPI plus 1% for the next two years