The Chancellor's Autumn Statement, and recent developments at Holyrood, between them contain some important points to note

The 2012 Autumn Statement was delivered by the Chancellor, George Osborne, on 5 December. Arguably more of a Budget than a statement, some of the key measures for businesses, employers and individuals are summarised here.

Corporation tax

The main rate of corporation tax will fall to 21% from April 2014 (following the reduction to 23% from April 2013). This applies to companies with profits in excess of £300,000. However there is no comparable cut for SMEs with profits below £300,000: the small profits rate remains at 20% from April 2013.

Annual investment allowance (AIA)

The capital allowances AIA will temporarily increase tenfold, from £25,000 to £250,000, for qualifying investment in plant and machinery for two years from 1 January 2013. It was reduced from £100,000 in April 2012. While this is welcome and is a significant increase, whether or not businesses, particularly SMEs, can currently afford such levels of investment in order to take full advantage of the allowance remains to be seen.

Cash accounting

The Government will apply a new voluntary cash basis for calculating tax for small unincorporated businesses with receipts of up to £77,000 from April 2013. This is a welcome simplification and means that such businesses will not, generally, have to distinguish between income and capital expenditure for tax purposes.


The Government announced its intention to introduce a general anti-abuse rule (GAAR) from April 2013 to tackle artificial and abusive tax avoidance schemes. This is unsurprising given recent media coverage on perceived tax avoidance by multinationals such as Starbucks and Amazon transferring profits to tax havens. It is striking in this statement how the Government has not only devoted more resources to anti-avoidance but has also broadened the range of weapons it intends to use – perhaps most significantly by using the leverage of potentially withholding Government contracts to persuade companies to behave.

Employee share ownership

The Autumn Statement confirms the introduction of “employee shareholder” as a third form of employment status alongside “employee” and “worker”, with effect from April 2013. In return for giving up certain employment rights, employee shareholders will be entitled to shares worth between £2,000 and £50,000 in their employer company. Any profit when the shares are sold will be exempt from CGT. However the Government has yet to confirm the income tax treatment of such shares. Given its piecemeal approach to the new employment status, it is very difficult for employer companies to assess whether the new arrangement is of interest to the company and its employees. There is also a failure to address how shares will be valued, which is of particular concern for unlisted companies.

Enterprise management incentives (EMI)

It was announced that the Government will extend CGT entrepreneurs’ relief to shares acquired through the exercise of EMI share options, by removing the 5% minimum shareholding requirement and allowing the 12-month minimum holding requirement to commence on the date the option is granted. This measure will apply to shares acquired on or after 6 April 2012 that are disposed of on or after 6 April 2013, and is particularly welcome as it will make the remuneration package offered by companies who grant EMI options more attractive.

Employee share schemes

The consultation on draft legislation for Finance Bill 2013, published on 11 December, indicates that legislation will be introduced to give effect to the Office of Tax Simplification’s proposals to simplify aspects of tax advantaged employee share schemes.

Personal allowance increase

The Chancellor announced that the personal allowance for those born after 6 April 1948 will increase (by £1,335) to £9,440, and the basic rate limit will be set at £32,010 for 2013-14. It was also announced that for each of tax years 2014-15 and 2015-16, the basic rate limit will increase by 1% rather than by inflation. The Chancellor also confirmed his commitment to reduce the additional rate of tax to 45% (37.5% for dividends) from 2013-14.


The Government will reduce the amount of tax relief available for pensions saving by cutting both the annual allowance, from £50,000 to £40,000, and the lifetime allowance, from £1.5 million to £1.25 million, for the tax year 2014-15 onwards. The measures will be included in the Finance Bill 2013.

“Taxes heading north” (Journal, October 2012, 16) discussed the emerging shape of the Scottish land and buildings transaction tax (LBTT), noting that from April 2015, it will replace UK SDLT, which will cease to apply to transactions involving land in Scotland.

The Land and Buildings Transaction Tax (Scotland) Bill was published on 29 November, and is the first to use powers set out in the Scotland Act 2012 to enable the Scottish Parliament to both set and collect a proportion of its own revenue.

The Finance Committee has issued a call for evidence and expects to take oral evidence during January and February 2013 and report on the general principles around the end of March. It is worth noting that some areas, including the rules on partnerships and the basis of the taxation of leases, are to be the subject of further consultation before draft legislation is published.

The Scottish Government has also launched a consultation on wider tax management arrangements which will apply to all future devolved taxes, like tax collection, the use of information, penalties for late payment or for tax evasion, and appeals.

This was published on 10 December and ends on 12 April 2013.

Details of both the LBTT proposals and the consultation on tax management are available at

The Author
Christine Yuill, senior associate, Pinsent Masons LLP
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