South: Businesses 'positive' about autumn statement as chancellor cuts corporation tax

Businesses of all sizes can take away from the Autumn Statement a little unexpected cheer, said Thames Valley and south coast accountants James Cowper.Ian Miles, partner, explained: “The main rate of corporation tax is to fall to 21% from April 2014 and there will be a ten-fold increase in the annual investment allowance in plant and machinery to £250,000 for two years from 1 January 2013. This, said the chancellor, will cover 99% of all businesses.”

He added: “Oxford is set for a further windfall, with the city earmarked as one of just 12 to receive ultra-fast broadband. The city will also benefit from the additional £600m set aside for scientific research.

“A temporary doubling of the Small Business Rate relief scheme will help over half a million small firms and 350,000 will pay no rates at all.”

He continued: “Those businesses who rely on motor vehicles will also cheer the scrapping of the planning three pence increase in fuel duty scheduled for January.”

Patricia Mock, a tax director in the private client services practice at Deloitte, commented on the key points from the Autumn Statement for individuals: “The Chancellor today confirmed the long-trailed cut in pension relief, with the annual allowance reduced from £50,000 to £40,000. He also unexpectedly announced a cut on the overall cap on lifetime contributions from £1.5m to £1.25m. It will be possible to lock into the £1.5m cap, provided no further contributions are made from April 2014. A personalised protection option is also being considered by the Government which would mean those with a pension pot already in excess of £1.25m will be able to protect their lifetime limit at that level, but still be able to make additional contributions. This will allow pensions to be built up to their previous level if there are investment losses. Arguably, the surprises come with the length of notice he has given us, over a year with the changes due to apply from April 2014, and that they’re expected to raise £1 billion each year by 2016/17 for the Treasury.

“The chancellor provided taxpayers with an unexpected giveaway, by announcing a £235 rise in annual personal allowances, in addition to the £1,100 already scheduled from April 2013. The increase will mean a tax saving of £47 over the year for both basic and higher rate taxpayers who receive personal allowances; the higher rate band has been reduced to ensure that this is the case. The increase to £9,440 next year is part of the general progression towards a personal allowance of £10,000, though the chancellor implied we could get to that point sooner than planned – a possible good news story for taxpayers to listen out for in the Budget in March 2013."

CBI director general John Cridland said: “The chancellor has gone further than expected by cutting the headline corporation tax rate by an extra 1%, which sends a clear signal that the UK is a leading place to invest.

“Increasing the Annual Investment Allowance from £25,000 to £250,000 for two years will stimulate business investment in buildings and machinery, particularly by SMEs. The time limit on this measure should help to bring forward much-needed investment into the next two years.

“Extending the enhanced small business rate relief for another year will be good news for firms facing significant cost pressures.

“We support the introduction of an ‘above the line’ credit for R&D, but this must be optional not mandatory to avoid unintended consequences for some companies.”

Resources: James Cowper website