We have summarised below the key business tax announcements in the 2011 Autumn Statement.

For links to PLC's coverage of the implications of the Autumn Statement for a range of other practice areas, including property, construction and financial services, see PLC Autumn Statement.

The full bank levy rate for short term liabilities will increase from 0.078% to 0.088% with effect from 1 January 2012. This is to offset the shortfall in receipts for 2011 and future years, given that the government wishes to raise at least £2.5 billion per year from the bank levy. The lower rate of levy for long-term equity and liabilities will remain at 0.0375%. For background on the bank levy, see Practice note, Bank levy.

The Chancellor also stated in his speech that the UK government will not agree to the proposed EU Financial Transaction Tax. For background, see Legal update, Commission presents proposal for financial transaction tax (detailed update) and Financial Transaction Tax Directive: legislation tracker.

(See HM Treasury: Autumn Statement document 2011, paragraphs 1.135 and 2.28.)

100% capital allowances will apply to expenditure incurred between April 2012 and March 2017 on plant and machinery for use in designated assisted areas within six Enterprise Zones (EZ). The EZs concerned are the Black Country, Humber, Liverpool, North Eastern, Sheffield and Tees Valley. There will be a cap of €125 million per project. For background, see Legal update, Enterprise Zones: 11 more locations and enhanced capital allowances announced. This latest announcement sets out for the first time the nature of the enhanced allowances and the EZs in relation to which they will apply.

The government will continue to discuss with the devolved administrations enhanced capital allowances for business located in their EZs. The government is also considering creating an additional EZ in Battersea and expanding the existing EZ in the North East to encourage investment in the renewables industry. It will also approve the creation of EZs around BAE Systems' sites in Lancashire and Humber.

(See HM Treasury: Autumn Statement document 2011, paragraphs 1.88, 1.121 and 2.25.)

The capital gains tax annual exempt amount will be frozen at the 2011/12 amount for the tax year 2012/13 (£10,600 for individuals and personal representatives and £5,300 for trustees).

The government has also confirmed that legislation will be introduced in the Finance Bill 2012 to automatically increase the annual exempt amount in line with the consumer price index thereafter.

(See HM Treasury: Autumn Statement document 2011, paragraph 2.19 and HM Treasury: Autumn Statement 2011: policy costings.)

The income tax personal allowance for 2012/13 will be £8,105 (the 2011/12 personal allowance is £7,415). The basic rate limit will come down to £34,370 (from £35,000 in 2011/12). The additional rate threshold will remain at £150,000. There are no rate changes. This reflects the 2011 Budget announcement, see Legal update, 2011 Budget: key business tax announcements: Personal allowance and basic rate changes for 2011-12 and 2012-13.

In 2012/13, the Class 1 NICs (employee/primary) upper earnings limit will be £817 per week and the employer/secondary threshold will be £144 per week. There are no changes to the rates of NICs.

The ISA overall limit will be £11,280 (£10,680 in 2011/12) and the cash limit will be £5,640 (£5,340). Other rates, allowances and thresholds for the tax year 2012/13 will be announced in the 2012 Budget.

(See HM Treasury: table confirming tax and tax credit rates and thresholds for 2012-13.)

The government has confirmed that it will increase the annual rate of the ring fence expenditure supplement (RFES) from 6% to 10%. The RFES allows companies to elect to increase the value of certain losses carried forward from one period to the next by a specified percentage (currently 6%) for a maximum of six years, not necessarily consecutively (see further Practice note, Oil taxation: Capital allowances). The increase will be effective for accounting periods beginning on or after 1 January 2012.

(See HM Treasury: Autumn Statement document 2011, paragraph 2.29 and HM Treasury: Autumn Statement 2011: policy costings.)

The government plans to introduce an "above the line" tax credit in 2013 to encourage research and development (R&D) activity by larger companies. This is understood to be a credit against a claimant's corporation tax bill. Industry has argued that, under the current system, the enhanced tax deduction for R&D expenditure is dealt with purely by a claimant's accounting or finance department, meaning that its R&D team do not record the benefit and disregard it in the team's investment calculation. Moving to an "above the line" credit system would change this, meaning that the tax benefit of R&D investment would act as a more effective incentive for such investment.

The government consulted on the principle of such a measure in June 2011 (see Legal update, R&D tax credits: consultation responses and further consultation) and announced today that a further consultation will be launched with the 2012 Budget. The government also stated that R&D incentives for SMEs will not be reduced as a result of this measure. For background on R&D tax incentives, see Practice note, Intangible property: tax: Research and development and Practice note, R&D tax reliefs: practical aspects.

(See HM Treasury: Autumn Statement document 2011, paragraph 1.123.)

Changes will be made with effect from 29 November 2011 to prevent unintended excess tax relief arising for employers making asset-backed contributions to their registered pension schemes. The changes are designed to ensure that tax relief accurately reflects the amount of payments made by an employer to their scheme, while preserving as much flexibility as possible for employers and pension schemes to continue to use these arrangements.

Only those arrangements that fall within the structured finance legislation will be given upfront tax relief for the contribution paid under the arrangement. In such cases, no further relief will then be given on the instalments of the income stream paid to the pension scheme, except the interest element. In all other cases (those that do not fall under structured finance rules) relief will not be given upfront but on payments or amounts as they arise from the income stream. Transitional rules are also introduced. PLC Pensions will publish a more detailed analysis of this measure shortly.

Draft legislation to be included in the Finance Bill 2012 has been published today (see HM Treasury: employer asset-backed pension contributions: consultation on draft legislation for Finance Bill 2012 (29 November 2011)), together with a summary of responses to the government's consultation in this area earlier this year (see HM Treasury/HMRC: Employer Asset-backed Pension Contributions Summary of Responses (November 2011) and PLC Pensions, Legal update, Asset-backed pension contributions: HMRC consults on tax changes) and a Ministerial Statement (see Employer asset-backed pension contributions).

The government is publishing analysis showing that the temporary stamp duty land tax (SDLT) relief for first time buyers of residential property has been ineffective in increasing the number of first time buyers (for background, see Practice note, SDLT reliefs for residential property: The reliefs). As a result, the relief will come to an end on 24 March 2012 as planned.

(See HM Treasury: Autumn Statement document 2011, paragraph 1.103.)

The government has announced that, following consultation that took place during summer 2011, it will introduce a VAT exemption for services shared between VAT exempt bodies. This exemption should enable, amongst others, charities and other "not-for-profit" organisations that make VAT exempt supplies (such as independent schools, universities and higher education colleges, housing associations and residential care homes) and/or have non-business activities, to collaborate to achieve cost savings and economies of scale. Charity sector organisations have campaigned extensively for the EU exemption to be implemented.

For more detail on this measure, see PLC Private Client, Legal update, 2011 Autumn Statement: private client implications.

The government also confirmed today that on 6 December 2011:

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