Budget Summary for 2012
The contents of George Osborne’s third Budget were so well rehearsed by politicians, pundits and papers that the real thing threatened to be an anti-climax. One wag tweeted that the Budget was replaced by a Chancellor’s review of the morning’s newspapers. Was there anything left that the Chancellor could surprise us with, especially as he had such little fiscal room for manoeuvre?
The answer was both yes and no. After all the rumours about 50%, 45% or even 47% income tax, Mr Osborne decided to make the change to 45% from April 2013. His 2013/14 increase in the personal allowance allowed him to start phasing out the age allowance – an unexpected revenue-raising ploy.
The stamp duty land tax increase for homes valued at £2 million or more was well telegraphed, and accompanied by some unexpectedly severe anti-avoidance provisions that could affect existing owners.
The impact of the child benefit removal for higher earners was softened by increasing the threshold and phasing it in. However, people with very large incomes could be pained by the proposed new limit on total income tax reliefs.
Businesses should be pleased with the predicted reduction in corporation tax rates and the surprise uplift in the enterprise management incentive (EMI) limit.
There were many anti-avoidance provisions including proposed consultation on a general anti-abuse rule.
- Personal allowance to be increased to £9,205 in 2013/14, and the higher rate threshold reduced by £1,025 to £41,450.
Age allowance to be frozen from 2013/14 and then phased out.
- Limit on maximum amount of income tax reliefs that can be claimed from 2013/14.
- Additional rate of income tax reduced to 45% from 2013/14.
- 7% SDLT rate for residential properties valued at over £2 million and new measures to counter ownership through corporate entities.
- No changes to main pensions tax reliefs.
- Restrictions on the tax relief available on benefits from regular premium life assurance policies.
- Child benefit to be phased out where income is over £50,000.
- Corporation tax main rate cut to 24% from April 2012 and to 22% by April 2014.
- Voluntary cash basis based on turnover for tax on profits of small unincorporated businesses.
- An increase from £120,000 to £250,000 in the individual grant limit for EMI schemes.
- A further tightening of the car benefit rules through to 2016/17.