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Annual UK pension allowance to drop to £40,000

Corporation tax rate to be reduced to 21 per cent from April 2014 

5 December 2012

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By Manju Manglani, Editor (@ManjuManglani)

The annual tax relief for pensions will be reduced by £10,000 to £40,000 from 2014-15, George Osborne said today in his autumn statement.

The UK’s chancellor of the exchequer said the lifetime allowance will also be reduced from £1.5m to £1.25m from 2014-15.

The reduction is expected to reduce the cost of tax relief to the public purse by an extra £1bn a year by 2016-17.

“I know these tax measures will not be welcomed by all; ways to reduce the deficit never are. But we must show we’re all in this together. When you’re looking for savings, I think it’s fair to look at the tax relief we give to the top two per cent. I want to help the great majority of savers,” he said.

In an effort to give Britain “the most competitive business tax regime of any major economy in the world”, the main rate of corporation tax will also be reduced to 21 per cent from April 2014.

In addition, for the two years from 1 January 2013, the annual investment allowance in plant and machinery will increase tenfold.

“Instead of £25,000 worth of investment being eligible for 100 per cent relief, £250,000 worth of investment will now qualify. This capital allowance will cover the total annual investment undertaken by 99 per cent of all the business in Britain,” said the chancellor.

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