An update on what we already know: Personal and Corporate taxes

Personal taxes

The rates of income tax applying for the year 2012/13 will be unchanged so that the basic rate of income tax is 20%, the higher rate is 40% and the additional rate is 50%.

From 6 April 2012 the Finance Bill includes:

·        An increase to the personal allowance by £630 to £8,105 for those under 65; and

·        A reduction to the basic rate limit by £630 to £34,370.

However the starting point for paying income tax at the 40% rate remains unchanged from 2011/12 to 2012/13.

The capital gains tax exempt amount is frozen at the 2011/12 level of £10,600. In future the CPI will be used as the default indexation assumption for the capital gains tax annual exempt amount.

The inheritance tax allowance nil rate band has been frozen at £325,000 until April 2015. From 6 April 2015 the CPI year on year increase will be used as the default indexation assumption for the nil rate band.

The rates of national insurance (NIC) are due to be released with the 2012 Budget.

Corporate taxes

As previously announced a further 1% reduction in the main rate to 24% for the Financial Year commencing 1 April 2013 has been included in the draft legislation for Finance Bill 2012. The main small profits rate remains at 20%.

For further information/advice on this topic please visit www.wardwilliams.co.uk