George
Osborne delivered his third budget on 21 March 2012. The contents of the budget were so well rehearsed by
politicians, pundits and papers that the real thing threatened to be an
anti-climax. There were no major surprises but some interesting
announcements for businesses and individuals alike and the usual controversial
headlines.
Business Highlights
For businesses the focus was on moving towards making the UK a more competitive place to do business. The main changes included a further 1% cut in corporation tax which means that the large company rate will be 24% from 1 April 2012, falling to 23% in 2012 and 22% in 2014.
The Chancellor confirmed details of the new ‘Patent Box’ regime which will mean reduced rates of corporation tax on qualifying Patent profits from 1 April 2013 and an eventual rate of 10% by 2018.
An ‘above the line’ credit for Research and Development will be introduced from April 2013. Loss-making companies will be able to claim a payable credit. As previously announced, from 1 April 2012, the rate of R&D tax credits for Small and Medium sized Enterprises will increase from 200% to 225%.
Corporation tax reliefs for the creative sector were announced including the video games, animations and high-end television sector. These will be introduced from April 2013, subject to EU State aid approval.
Small businesses (with turnover of less than £77,000) will welcome the proposed voluntary cash basis for calculating tax which will be introduced from April 2013, subject to consultation. There will also be consultation on a simplified expenses system and on proposals to introduce a disincorporation relief. These measures are all designed to improve the administration of the tax system for small businesses.
Stamp Duty Land Tax and VAT
A new Stamp Duty Land Tax rate of 7% for residential property purchases with a value of £2m was introduced with immediate effect. In addition, a higher rate of 15% will apply to residential properties purchased by companies and certain other ‘non-natural’ persons, subject to exemptions for property developers.
For VAT the main announcement was the launch of a consultation to correct VAT anomalies and close loopholes, including those in relation to the supply of hot take-away food. The Chancellor’s intention is to ensure that all hot food is taxed at the standard rate of 20%. Since the Chancellor’s budget speech there have been a number of headlines relating to ‘pasty tax’ and increasing pressure on the Chancellor to reconsider his proposals.
Personal Highlights
On the personal tax side the main headline was the reduction in the tax rate of income tax from 50% to 45% from 6 April 2013. This follows growing criticism of its effectiveness to raise revenue and suggestions that it is a risk to UK growth.
The announcement of the gradual phasing out of the age-related personal allowance was not well received by the media and tax-payers alike. Branded by the media as ‘granny-tax’ there will be no increase in the age-related personal allowances from 2013/14 until alignment with the standard personal allowance is achieved.
For 2013/14 the standard personal allowance will rise to £9,205, moving nearer to the Chancellors target of £10,000. The basic rate band will be reduced from £34,370 to £32,245. This will mean that the higher rate threshold will reduce from £42,475 to £41,450.
Child benefit will be withdrawn for some taxpayers by an income tax charge with effect from 7 January 2013. The charge will apply to households (regardless of marital status) where a parent or partner has an ‘adjusted net income’ of over £50,000 a year.
As well as making several changes to the existing Enterprise Investment Scheme regime, the previously announced Seed EIS (SEIS) was introduced. The SEIS will give 50% income tax relief for investments in qualifying companies of up to £100,000 and a CGT reinvestment exemption.
The 2012 Budget presents a variety of challenges and opportunities. For more information and advice on how you will be affected personally please contact Ward Williams at enquiries@wardwilliams.co.uk or on 01932 830664.
Business Highlights
For businesses the focus was on moving towards making the UK a more competitive place to do business. The main changes included a further 1% cut in corporation tax which means that the large company rate will be 24% from 1 April 2012, falling to 23% in 2012 and 22% in 2014.
The Chancellor confirmed details of the new ‘Patent Box’ regime which will mean reduced rates of corporation tax on qualifying Patent profits from 1 April 2013 and an eventual rate of 10% by 2018.
An ‘above the line’ credit for Research and Development will be introduced from April 2013. Loss-making companies will be able to claim a payable credit. As previously announced, from 1 April 2012, the rate of R&D tax credits for Small and Medium sized Enterprises will increase from 200% to 225%.
Corporation tax reliefs for the creative sector were announced including the video games, animations and high-end television sector. These will be introduced from April 2013, subject to EU State aid approval.
Small businesses (with turnover of less than £77,000) will welcome the proposed voluntary cash basis for calculating tax which will be introduced from April 2013, subject to consultation. There will also be consultation on a simplified expenses system and on proposals to introduce a disincorporation relief. These measures are all designed to improve the administration of the tax system for small businesses.
Stamp Duty Land Tax and VAT
A new Stamp Duty Land Tax rate of 7% for residential property purchases with a value of £2m was introduced with immediate effect. In addition, a higher rate of 15% will apply to residential properties purchased by companies and certain other ‘non-natural’ persons, subject to exemptions for property developers.
For VAT the main announcement was the launch of a consultation to correct VAT anomalies and close loopholes, including those in relation to the supply of hot take-away food. The Chancellor’s intention is to ensure that all hot food is taxed at the standard rate of 20%. Since the Chancellor’s budget speech there have been a number of headlines relating to ‘pasty tax’ and increasing pressure on the Chancellor to reconsider his proposals.
Personal Highlights
On the personal tax side the main headline was the reduction in the tax rate of income tax from 50% to 45% from 6 April 2013. This follows growing criticism of its effectiveness to raise revenue and suggestions that it is a risk to UK growth.
The announcement of the gradual phasing out of the age-related personal allowance was not well received by the media and tax-payers alike. Branded by the media as ‘granny-tax’ there will be no increase in the age-related personal allowances from 2013/14 until alignment with the standard personal allowance is achieved.
For 2013/14 the standard personal allowance will rise to £9,205, moving nearer to the Chancellors target of £10,000. The basic rate band will be reduced from £34,370 to £32,245. This will mean that the higher rate threshold will reduce from £42,475 to £41,450.
Child benefit will be withdrawn for some taxpayers by an income tax charge with effect from 7 January 2013. The charge will apply to households (regardless of marital status) where a parent or partner has an ‘adjusted net income’ of over £50,000 a year.
As well as making several changes to the existing Enterprise Investment Scheme regime, the previously announced Seed EIS (SEIS) was introduced. The SEIS will give 50% income tax relief for investments in qualifying companies of up to £100,000 and a CGT reinvestment exemption.
The 2012 Budget presents a variety of challenges and opportunities. For more information and advice on how you will be affected personally please contact Ward Williams at enquiries@wardwilliams.co.uk or on 01932 830664.
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