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Friday, 29 August 2014

Five things every business needs to know about the Autumn Statement

There were some positive measures announced by the Chancellor in his Autumn  Statement on 5 December, and some not so positive.

1.Corporation Tax rates
The main rate of corporation tax payable by companies will fall to 21%  from 1 April 2014 (it was previously announced that it would fall to 22%). The small profits rate remains at 20%. Therefore, there will be only a 1%  turn between the two rates and the impact of associated companies and  the effective rate of corporation tax for companies within the margin will
become negligible.  We expect that a single rate of 20% is the ultimate aim.

2. Capital Allowances
The annual investment allowance, being the amount a business can spend  on plant and machinery to obtain 100% relief in the year of expenditure will  increase ten-fold from 1 January 2013 for two years.  This rate was only recently reduced from £100,000 to £25,000 and the  large increase is welcome news to encourage capital expenditure. Many businesses would be advised to delay capital expenditure until 1 January  2013.

3.Simpler Income Tax for Smaller Unincorporated Businesses
This will be introduced from April 2013 to allow eligible self employed  individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. They will generally not have to  distinguish between revenue and capital expenditure. Furthermore, all  unincorporated businesses will be able to choose to deduct certain  expenses on a flat rate basis.

4. Pensions Tax Relief
From April 2014 the annual allowance for pensions tax relief is to decrease  from £50,000 to £40,000. The lifetime allowance is to decrease from  £1.5million to £1.25million. These figures include any contributions made  by the employer.

5.Fuel duty increase scrapped
The forthcoming 3p increase due in January has been scrapped. The  planned increase for April 2013 has been delayed until September.

Nigel Holmes, Director – Corporate Tax, Armstrong Watson

For more information contact Nigel Holmes by emailing  nigel.holmes@armstrongwatson.co.uk or call 01228 690200 

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