Category: Budget 2012

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2012 Autumn Statement

 

George Osborne delivered his 2012 Autumn Statement yesterday and we have summarised the key points below:

INDIVIDUALS

  • The Personal Allowance is to increase from £8,105 to £9,440 from April 2013 for those aged under 65. This is part of a plan to ultimately increase the Personal Allowance to £10,000.
  • The band of income tax rate at 20% is being reduced from £34,370 to £32,010 from April 2013
  • The threshold for 40% income tax is to decrease from £42,475 to £41,450 in 2013/14 but will increase by 1% in 2014/15 and 2015/16 to £41,865 and £42,285
  • The 50% band currently applies where taxable income exceeds £150,000 but the rate will fall to 45% next year.
  • New universal credit for Income Tax is coming into effect next year as previously announces
  • The Capital Gains Tax annual exemption is to increase by 1% to £11,100
  • The Inheritance Tax exemption is to increase in 2015/16 from £325K to £329K
  • No new tax was implemented on property
  •  From 2014/15, pensions lifetime allowance is to reduce from £1.5m to £1.25m and annual allowance from £50K to £40K. This restriction of pensions tax relief is a £1bn tax rise for high earners
  • The ISA limit extended from April 2013 to £11,520
  • The Basic State pension is to increase by 2.5% next year which is a rise to £110.15 per week
  • Tougher measures on welfare fraud are announced. Changes to welfare benefits will save £3.7bn in 2015/16
  • Child benefit is to increase by 1% for 2 years with effect from April 2014

BUSINESSES

  • Main rate of Corporation Tax cut by 1% to 21% in April 2014 (was set to be 22%), currently set at 23% for April 2013
  • Increase in Annual Investment Allowance for capital allowances from £25K to £250K from 1 January 2013 for 2 years. This is a huge boost for expanding businesses
  • A number of tax avoidance loopholes are to be closed immediately, and anti avoidance will be further tackled by an increase of 2,500 in the number of tax inspectors
  • New general Anti Avoidance Rule still be introduced in April 2013
  • £5bn to be received over 6 years from undisclosed Swiss bank accounts of UK residents
  • Temporary doubling of small business rate relief was to end 2011 – already extended to April 2013; now extended further to April 2014
  • Tax relief for employee shareholder scheme to be introduced
  • Consultation on new tax incentives for shale gas

OTHER ISSUES

  • The planned 3p rise in fuel duty from January 2013 is now cancelled.
  • Extra £5bn capital investment to be made in infrastructure – Northern Ireland will get its share
  • Broad band investment in various areas across UK
  • Extra £600m for scientific restructure in UK
  • £270m to be made available for improvements in further education in UK
  • £1bm to be made available to expand schools and build 100 new free schools and academies in UK
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Budget 2012: Key Points

George Osborne says his 2012 Budget will “reward work”, support working families and ‘unashamedly backs business’ but warns of need to continue his austerity drive in face of sluggish growth.

Budget 2012 Key Points:

Automatic review of state pension age to ensure it keeps pace with increasing lifespans. New single-tier state pension for future pensioners to be set at about £140 and based on contributions

Duty on all tobacco products to rise by 5% above inflation from 18:00 today – the equivalent of 37p on a packet of cigarettes. No change to alcohol duty. New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings. No change to existing plans on fuel duty (however, please note that plans to increase Fuel by 3p from August still stand). Vehicle excise duty to rise by inflation, but frozen for road hauliers

Good news for young entrepreneurs Government considering enterprise loans for young people to start their own business.

Corporation tax cut to 24% from next month. By 2014 it will fall to 22%

From midnight, new stamp duty level of 7% for homes worth more than £2m. Any such homes bought through companies will pay 15%. Extra funding to help construction firms building new homes

CHILD BENEFIT Will be phased out when someone in a houshold has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000. Only those earning more than £60,000 will lose the entirety of the benefit

From April 2013, the 50p top rate of tax will be cut to 45p. Personal income tax allowance will be raised to £9,205 from April 2013, making people £220 a year better off. However, those aged 65 and over will no longer be entitled to the higher rate of personal allowance leaving these individuals paying around £260 more in tax per year.

It should also be noted that around 300,000 workers woll be pulled into the 40% tax bracket. Currently workers can earn £42.475 before paing tax at 40%, this limit is now to be reduced to £41,450 – This was not announced in Mr Osborne’s speech but was included in the budget document.

 

 

 

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