Simpson Wood Budget Summary 2012
-
Upload
danielmcallister -
Category
Documents
-
view
373 -
download
0
Transcript of Simpson Wood Budget Summary 2012
![Page 1: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/1.jpg)
Budget 2012
This presentation is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining
from taking any action on the basis of the contents of this presentation. This presentation represents our understanding of law and HM Revenue & Customs practice as
at 21 March 2012.
21 March 2012
![Page 2: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/2.jpg)
www.simpson-wood.co.uk
Budget themes• Austerity to continue• Borrowing in 2011/12 expected to be £1bn below
previous forecast – still over £125bn• 2012 economic growth 0.8% – 0.1% up on earlier
forecast• Steady as she goes:
Draft Finance Bill 2012 clauses published last December.
Most tax and benefits changes announced alongside Autumn Statement.
No scope for giveaways.
2
![Page 3: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/3.jpg)
www.simpson-wood.co.uk
Personal tax allowances• Main allowance rises by £630 to £8,105 in
2012/13 Benefit clawed back from higher rate taxpayers
through smaller basic rate band. Other allowances generally rise by 5.6%.
• Main allowance rises by £1,100 to £9,205 in 2013/14
But basic rate band shrinks to £32,245. So higher rate taxpayers only receive a quarter of
basic rate tax payer’s benefit from allowance increase.
3
![Page 4: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/4.jpg)
www.simpson-wood.co.uk
Personal tax allowances• Personal allowance phased out above £100,000
No indexation of limit. Allowance reduced by £1 for each £2 of excess. No personal allowance above:
- £116,210 income in 2012/13- £118,410 income in 2013/14
Effective marginal tax rate 60% in band above £100,000 until allowance lost completely.
4
![Page 5: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/5.jpg)
www.simpson-wood.co.uk
Personal – income tax rates• Starting rate of tax 10% up to £2,710
Not available if non-savings taxable income >£2,710
• Basic rate up to £34,370 – a drop of £630 20% generally, but 10% for dividends Another £2,125 drop to £32,245 in 2013/14
• Higher rate up to £150,000 40% generally, but 32.5% on dividends
• ‘Additional rate’ over £150,000 – no indexation 50% generally, but 42.5% on dividends Cut to 45% (37.5% dividends) from 2013/14
5
![Page 6: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/6.jpg)
www.simpson-wood.co.uk
Child benefit• Original plan
£20.30 pw and £13.40 pw Lost if 1p of higher rate tax paid Based on individual not joint income ‘Bizarre and economically damaging set of
incentives’ – IFS• New plan
From 7/1/13, all benefit is lost if income £60,000 or more
Phased out from £50,000 income as tax charge 1% child benefit charge per £100 of income over
£50,000 Effective 57.52% overall ‘tax’ rate for two-child
family Joint income issue ignored Inter-spouse transfer or withdrawn claim? Pension contribution
![Page 7: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/7.jpg)
www.simpson-wood.co.uk
Tax credits• Child tax credit
Family element worth up to £545 Currently phased out at £40,000 of (joint) income For 2013/14, phasing generally starts much earlier:
- Typically lost for income > £26,000 for one child- Typically lost for income > £32,200 for two
children• Other tax credit changes
50+ element will end Backdating cut to one month First £2,500 of income fall ignored for in-year
increases 24hrs, not 16hrs work, for couples’ working tax
credit
![Page 8: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/8.jpg)
www.simpson-wood.co.uk
Personal tax – ISAs• Higher limits• 2012/13 maximum investment £11,280• 2012/13 cash element £5,640• Junior ISA launched November 2011
£3,600 limit – cash or stocks & shares No change for 2012/13
8
![Page 9: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/9.jpg)
www.simpson-wood.co.uk
Life policies• An effective £3,600 cap on total premiums
payable to qualifying life policies from April 2013 Higher contributions will mean benefits are
potentially taxable Transitional reliefs promised
• New rules to prevent avoidance through: Shifting gains between policyholders Interdependent clustered policies
![Page 10: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/10.jpg)
www.simpson-wood.co.uk
Personal tax – VCT and EIS• EIS
Income tax relief limit doubles to £1,000,000 each tax year
• VCT and EIS investment companies – April 2012 Up to 249 employees Gross assets up to £15 million Investment up to £10 million New ‘disqualifying investment’ rules No feed-in-tariffs or share acquisitions
10
![Page 11: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/11.jpg)
www.simpson-wood.co.uk
Personal tax – Seed Enterprise Investment Scheme (SEIS)• 50% income tax relief• CGT reinvestment exemption – 2012/13 only• Maximum total investment £100,000 per tax year• Very small, new companies:
No more than two years old Conduct genuine new business Fewer than 25 employees Gross assets no more than £200,000 £150,000 maximum total capital raised
• Due diligence and monitoring costs?
11
![Page 12: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/12.jpg)
www.simpson-wood.co.uk
Personal tax reliefs• New limit on income tax reliefs from 2013/14• Applies only to uncapped reliefs, e.g. qualifying
interest• If more than £50,000 of relief claimed, relief
limited to greater of 25% of income £50,000
• Government will consult to ensure this ‘will not impact significantly on charities that depend on large donations’
![Page 13: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/13.jpg)
www.simpson-wood.co.uk
Cars and vans• Company car benefit April 2012
Reworking of CO2 bands 75g/km or less – 5% charge 76g/km -99g/km – 10% charge 100g/km and above: 11% + 1% for each 5g/km Further 1% increase in scale rates in 2013/14 Big jumps for some low emission vehicles
• Fuel benefit Basis figure for cars rises to £20,200, vans
unchanged
13
![Page 14: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/14.jpg)
www.simpson-wood.co.uk
National insurance contributions• Limits
Lower earnings limit rises to £107 a week for 2012/13
Primary (employee) threshold rises to £146 a week Secondary (employer) threshold rises to £144 a
week Upper earnings limit stays to £817 a week
• Rates Main rates unchanged
• Contracting out Only available for defined benefit schemes in
2012/13- Many (re)joining state second pension (S2P)
NIC rebates cut by 0.3% (employer) and 0.2% (employee)
14
![Page 15: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/15.jpg)
www.simpson-wood.co.uk
Pensions• Annual allowance left at £50,000 for 2012/13
Follows cut for 2011/12 from £255,000 to £50,000 Annual allowance charge matches tax relief given Three year ‘carry forward’ facility offers opportunity
to grab 50% relief on contributions up to £200,000 in 2012/13
• Lifetime allowance falls to £1.5m in 2012/13 Future allowance increases very unlikely in short
term ‘Fixed protection’ option must be claimed by 5 April
2012- Implies no further contributions after 5 April
201215
![Page 16: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/16.jpg)
www.simpson-wood.co.uk
Capital taxes• CGT rate and annual exemptions 2012/13
Rates of tax 18% / 28% Individual £10,600 Trusts £5,300
• IHT Nil rate band stays frozen at £325,000 36% estate rate for 10% charitable gifts
• Stamp taxes £250,000 first buyer threshold ends 24 March 2012 7% SDLT on properties over £2m from 22 March
2012 Attack on SDLT avoidance via offshore companies
16
![Page 17: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/17.jpg)
www.simpson-wood.co.uk
Corporation tax• Main rate from April 2012: 24%
2% cut from 2011, when 1% was expected Falls to 22% in 2014
• Small profits rate from April 2012: 20% • Effective marginal rate from April 2012: 25%• Thresholds remain at 1994 levels
Up to £300,000 £300,000 – £1.5 million Over £1.5 million
• Bank levy increased so banks will not benefit overall
17
![Page 18: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/18.jpg)
www.simpson-wood.co.uk
Capital allowances, R&D reliefs• Annual investment allowance falls to £25,000
from April 2012 But all may not be lost
• Main plant and machinery (P&M) rate of writing down allowance fall to 18% in 2012
• Rate of R&D tax credit for SMEs rises to 225% from April 2012 £10,000 minimum expenditure requirement
removed• New ‘above the line’ R&D credit from April 2013
18
![Page 19: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/19.jpg)
www.simpson-wood.co.uk
VAT• VAT rates: no change• Turnover limits
Registration limit £77,000 Deregistration limit £75,000
• Fuel scale charges Revised upwards
• Low value consignment relief VAT-free imports from Channel Islands end after 31
March 2012• All returns and payments online from 1 April 2012
19
![Page 20: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/20.jpg)
www.simpson-wood.co.uk
Non-domiciles etc
• £50,000 annual charge for those with 12 or more years UK residence from 2012/13
• Exemption for remittances used for commercial investment in UK business (quoted or unquoted)
• Some minor simplification of the rules• No more changes in this Parliament• New statutory residence test delayed until 2013• ‘Ordinary residence’ concept to disappear in
2013
![Page 21: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/21.jpg)
www.simpson-wood.co.uk
Tax simplification• 36 ‘outdated’ reliefs to be abolished
Some in Finance Bill 2012, some by regulations Tax reserve certificates Luncheon vouchers (from 2013/14) Life assurance premium relief from (2015/16) Black beer Angostura bitters
![Page 22: Simpson Wood Budget Summary 2012](https://reader038.fdocuments.in/reader038/viewer/2022110219/54c11ef14a795938118b45bd/html5/thumbnails/22.jpg)
Budget 2012
This presentation is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining
from taking any action on the basis of the contents of this presentation. This presentation represents our understanding of law and HM Revenue & Customs practice as
at 21 March 2012.
21 March 2012