Autumn Statement 2012: No Relief for Wealthy Taxpayers

Chancellor George Osborne continued his attack on wealthy taxpayers in his Autumn Statement 2012 by laying out his plans to crack down on tax avoidance.

In his speech, he outlined his hope that high earners would see the fairness in contributing more tax.

He explained 25% of income tax is paid by just 1% of all earners with the wealthiest 5% paying around half of all income tax.

“Those with the most should contribute the most, but fairness in the tax and welfare system also means being fair to taxpayers,” he said in the House of Commons.

“Too many people illegally evade paying the right amount of tax and we have tried to put this right.”

He explained HM Revenue & Customs had increased the number of tax prosecutions by 80% in recent years.

Tax targets

The target is to collect an additional £7 billion a year tax – and the Chancellor is recruiting 2,500 extra tax inspectors and introducing general anti-avoidance laws next year to help raise the cash.

Other action includes imminent legislation to close VAT and tax loopholes for business costing the Treasury up to £10 billion a year.

The Treasury also expects to collect £5 billion over the next six years from an agreement with Switzerland to raise tax on earnings and assets from undisclosed bank accounts.

“Britain, France and Germany have also approached the Organisation of Economic Co-operation and Development to make corporation tax avoidance by multinational companies a priority – and the UK is looking for £2 billion more tax from this move alone,” said Osborne.

The OECD has been the driving force behind tightening up the transfer of tax information between countries.

In the statement, the Chancellor also confirmed Britain will have no new property tax because revaluing homes would work out too expensive.

Tax allowances rise

Income tax thresholds were raised –

  • All taxpayers will see their tax free allowance rise by an extra £235 on top of the promised £800 to £9,440 a year from April 2013.
  • Higher rate taxpayers will see the amount of money they can earn before paying income tax at 40% rise to £41,865 from April and a further 1% to £42,285 in April 2014.

The annual exempt allowance for capital gains tax will go up 1% from April to £11,100, while the nil rate band for inheritance tax also rises 1% in April 2015 to £329,000.

“The government believes that changes to tax and public spending should impact fairly across society,” said Osborne.

“In light of its decision to limit increases in benefits to 1%, and the government’s plans to make public sector pay awards that average at 1%, the government believes it is fair and consistent to limit increases in personal tax thresholds, while continuing to support low and middle income households through the increase in the personal allowance.”

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