Budget 2012 - The Highlights
21/03/2012
BUDGET 2012 – THE HIGHLIGHTS
CHANCELLOR George Osborne delivered his second Budget to the House of Commons on Wednesday 21st March 2012 at 12.30.
Corporation Tax
The Main rate of Corporation Tax reduced by 2% from April 2012 - rather than 1% as previously announced - and to fall by 1% in each of the next two years to reach 22% in April 2014
Bank Levy rate is to be adjusted next year to offset the effect of Corporation Tax reduction on banks.
There will be a crackdown on tax avoidance schemes designed to avoid corporation tax which is effective immediately.
Stamp Duty
Homeowners face a hike in stamp duty from 5 per cent to 7 per cent for properties sold for more than £2million, plus a ban on a loophole that allows them to put properties in the name of offshore companies and dodge the tax altogether. A rate of 15% will apply for residential properties valued at over £2m included in a corporate entity.
There will be a crackdown on tax avoidance schemes designed to avoid stamp duty land tax which are effective immediately.
Capital Gains Tax
CGT remains unchanged at 18% and 28%.
The Capital Gains Tax regime will be extended to non-resident, non-natural persons such as companies. This will commence from April 2013 following consultation.
Income Tax
Personal tax allowance to rise by £1,100 to £8,105 in April 2013.. This will hand approx. £220 per year for 24 million workers.
This furthers the aim to increase the personal allowance to £10,000.
The Chancellor announced a reduction of the 50p top tax rate to 45% in April 2013. This measure is estimated to cost £100m.
A detailed consultation on integrating the operation of income tax and NIC’s will be undertaken and published after the Budget setting out the options of how this will operate.
A limit on all uncapped income tax reliefs has been introduced. Anyone claiming a relief of more than £50,000 will be limited to 25% of income (or £50,000, whichever is greater)
A new cash basis for calculating tax for small unincorporated business is proposed reducing the time taken for such businesses to calculate tax.
There will be a crackdown on tax avoidance schemes designed to avoid income tax which are effective immediately.
VAT
Value added tax (VAT) anomalies caused by similar products being taxed differently will be addressed. Loopholes will be closed to prevent avoidance and promote compliance.
Child Benefit
Child benefit - Original plans for the benefit to be removed for households with at least one parent earning more than £42,475 have been scrapped.
Now only households where a parent earns over £50,000 a year will lose. Households where one member has an income between £50,000 and £60,000 will only lose the benefit gradually
General Anti-Abuse Rule
The Chancellor has accepted the recommendation of the Aaronson Report targeting artificial and abusive tax avoidance scheme to improve the UK’s ability to tackle tax avoidance without damaging the UK’s attractiveness as a location for business investment. Consultation will take place to include this in the Finance Bill 2013.
Public Finances and growth
The Office for Budget Responsibility (OBR) has increased its forecast for UK growth in 2012 by 0.1 to 0.8 per cent. Growth next year is forecast at 2 per cent, 2.7 per cent in 2014 and 3 per cent in 2015 and 2016.
The UK's borrowing deficit this year will be £126billion - £1billion ahead of target. The state's deficit is forecast to reach 7.6 per cent as a share of GDP next year, down from almost 48 per cent in 2010 to 43 per cent in 2013.
Inflation is forecast to fall from 2.8 per cent this year to 1.9 per cent in 2013 and 2 per cent by the end of the forecast period.
The Chancellor confirmed plans to take out Government loans that will not be repaid for 100 years, despite fears of low investor demand.
The Chancellor will consult on 'super-long' bonds which will allow the Government to lock in current low borrowing costs, or gilt yields.
Corporation tax reliefs for the video games, animation and high-end television industries will be introduced from April 2013.
Business and bank taxes
Bank Levy rate is to be adjusted next year to offset the effect of Corporation Tax reduction on banks.
Tobacco, Alcohol and Fuel
Duty of tobacco to rise by 5 per cent above inflation from tonight at 18.00
37p increase on a pack of 20 cigarettes. That raises duty faster than previous 2 per cent-above-inflation plans.
There is no freeze in fuel duty rising in line with inflation (RPI).
Sunday Trading and the 2012 London Olympics
There will be limited relaxation of Sunday trading laws - for eight weeks around the Olympics, starting on July 22 to 9 September 2012.
Contact CWBA Chartered Accountants and Chartered Tax Advisers for professional advice on (024) 76 601099 or e-mail on advice@cwba.co.uk Visit our website at http://www.cwba.co.uk
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