No Xmas Cheer from George

December 18, 2012

The main news from George Osborne in his Autumn Statement – surely a misnomer for a statement delivered in December – is that we are to continue to suffer more of the same austerity, which has been a hallmark of his Chancellorship, for longer than had been originally expected.

With little to give away, George did at least provide some small Christmas presents via an increase in the personal allowance to £9,440 for 2013-14, the cancellation of the 3p per litre increase in fuel duty and the increase in the Annual Investment Allowance to £250,000 from 1st January 2013.

However these small gifts were counteracted by plenty of bad news for the future with 2014-15 heralding a number of revenue raising initiatives – the usual annual increase in the higher rate tax threshold of tax will be restricted to 1% rather than inflation; the annual pension contribution limit will reduce from £50,000 to £40,000; the pension lifetime allowance will reduce from £1.5mn to £1.25mn; and finally there will be no increase in the Inheritance Tax threshold and there will be a paltry £4,000 increase in 2015-16.

These changes will mean there will be many more taxpayers who need to review and plan their tax affairs whether they are currently earning or in retirement.

The ghosts of Christmases past were not out of the Chancellor’s reach either, with more HM Revenue resources being devoted to finding illicit historic income and gains hidden in Swiss bank accounts, and also new initiatives to close down tax loopholes and stamp out complex tax avoidance schemes.

Even with these and other tax changes, and some impressively creative figure work, George will still miss one of his main debt targets and as a result Britain may lose its triple A credit rating – it really is going to be a long cold Winter!