On 5 December 2012, Chancellor of the Exchequer George Osborne delivered to Parliament an Autumn Statement that showed a very grim economic picture.
The Eurozone crisis and other global economic difficulties were blamed for the unexpected lack of growth in 2012.
Along with the rest of the country, dentists will not be unaffected by the news. NHS dentists are likely to feel the austerity measures in their departmental budgets, while private dentists will have to face the fact that patients may be unwilling or unable to afford dental fees or treatment beyond a simple check up.
The Autumn Statement announced so many tax and forecast changes that it has been described as a ‘mini budget’ by the media.
Highlights include an increase of £235 to personal allowance (maximum earnings before tax is triggered) raising it to £9,440 in 2013/14.
The 40% higher rate threshold will increase by 1% in both 2014/15 and 2015/16; while the upper earnings limit and upper profits limit for National Insurance Contributions (NICs) will increase to stay in line with the higher rate threshold.
Pension savings were also targeted. The annual allowance will fall from £50,000 to £40,000, although a new fixed protection regime will be available to prevent any retrospective tax changes as a result of this reduction. This cut relates to private pension contributions and was made together with a reduction in lifetime concessions (from £1.5m to £1.25m from 2014/15); which will impact on principals hoping to retire on a larger pension pot.
Practice owners will be interested to note the cuts to the main rate of corporation tax from 24% to 23% in April 2013 and to 21% the following year. The reduction for 2014 is 1% more than previously announced, making incorporation an ever more attractive proposition. In addition, the annual exempt amount for capital gains tax will increase by 1% for 2014/15 and again the next year, bringing the limit to £11,100 in 2015/16.
Investment in plant and machinery is being encouraged, raising the allowance limit from £25,000 to £250,000 for two years from January 2013. There’s also good news in that the temporary twofold increase in small business rate relief will be prolonged for a further year from 1 April 2013. Subject to consultation, all newly built commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty property rates for the first 18 months, up to the state aid limits.
The government is taking a more proactive approach to tackling tax avoidance and evasion, announcing a number of measures that included enhancements to HMRC’s powers and resources.
With effect from 5 December 2012, three corporation tax avoidance schemes involving loan relationships and derivatives have been closed down, while HMRC will use more resources and data gathering to identify businesses that are not declaring their full tax liability.
A comprehensive offshore tax evasion strategy will be published in spring 2013.
For more information please visit www.lansdellrose.co.uk or call Lansdell & Rose on 020 7376 9333.