KEY FEATURES OF THE 2012 BUDGET AS SEEN BY PETER HOWARD-JONES LIMITED
- Main corporation tax rate will reduce extra 1% to 24% from April 2012. Further 2% reduction in the main rate of corporation tax to 22% by April 2014.
- Subject to approval, new corporation tax credits from April 2013 for the film, video games, and certain TV industries.
- New voluntary cash basis for calculating tax for small unincorporated businesses from April 2013. Consultation expected to extend eligibility to businesses with turnover up to £77,000, with growth to £150,000 per year before normal accounting rules need to be adopted.
- Consultation announced on introduction of new tax reliefs enabling companies to unincorporate without incurring a significant tax cost.
- Remember tax relief for research & development increases to 225% from April 2012. New R&D tax credit ‘above the line’ to be introduced to enable loss making companies to claim cash credits.
- VAT threshold increased to £77,000 from £73,000.
Remember from last year, with effect from April 2012 reductions to:
- The rate of writing down allowances (WDAs) reduced to 18% from 20% for all assets other than those in the special rate pool.
- The rate of WDAs for assets in the special rate pool reduced to 8% from 10%.
- The Annual Investment Allowance reduced to £25,000 from £100,000.
From 6 April 2012
- Announced plans to accelerate increase of personal allowances to target £10,000.
- Personal allowance increases to £8,105; and then by further £1,100 to £9,205 from April 2013.
- Age related allowances for pensioners (over 65) to be simplified from April 2013.
- Basic rate band decreases to £34,370.
- Upper earnings limit remains £817 per week.
- 50% tax rate will reduce to 45% with effect from April 2013. Impact on the dividend additional rate which will reduce to 37.5% and the trust tax rate which will reduce to 45%.
- Child benefit to be withdrawn from higher rate taxpayers if any household member has income over £60,000. Tapering effect from £50,000.
- Remember from last time increase in maximum annual Enterprise Investment Scheme income tax relief from £500,000 to £1m from 2012.
- Remember reduced rate of IHT for estates leaving over 10% to charity from 2012.
Pension relief changes
- No changes to pension tax reliefs, despite widespread anticipation.
- Remember lifetime allowance reduced to £1.5m from £1.8m from April 2012.
- Remember for furnished holiday lettings from April 2012.
– Property must be available for letting to the public a minimum of 210 days in a year
– Property must be actually let for 105 days
Clamp-down on stamp duty land tax (SDLT) avoidance:
- From today (21/3/12), 15% rate of SDLT will apply to residential properties with a purchase price above £2 million, bought by ‘non-natural persons’, such as companies.
- And, government will consult on introduction of an annual charge on these properties.
- From tomorrow (22/3/12), new SDLT rate of 7% on all residential properties purchased for more than £2 million.
- From 6 April 2013 a new limit on all uncapped income tax reliefs will be introduced for anyone seeking to claim over £50,000 of reliefs. Restricted to the greater of £50,000 or 25% of the taxpayer’s income.
- Restriction will not include reliefs where caps already exist, such as Enterprise Investment Schemes.
- Recommendations of the Aaronson report on the introduction of a General Anti-Avoidance Rule to be accepted. Likely to be included in Finance Bill 2013.
This document is intended only as a guide in highlighting general issues which may be of interest. It is not a substitute for full professional advice and specialist assistance should be sought in relation to any particular circumstances. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this notice can be accepted by Peter Howard-Jones Limited.