Budget 2012 at a glance: Key Points
- March 21, 2012
- Posted by: cbc
- Category: Company Blog, Financial Services News
The key points of Chancellor George Osborne’s Budget on 21 March 2012.
- From April 2013, the 50p top rate of tax will be cut to 45p.
- Personal income tax allowance raised to £9,205 from April 2013, making 24 million people £220 a year better off, including higher rate earners.
- New general anti-tax avoidance rule to be introduced.
- Age-related allowances to be removed for new pensioners from April 2013, and replaced with a single personal allowance for all.
- Allowances for those already of pension age to be frozen, but George Osborne said “no pensioner will lose in cash terms”.
- Will be phased out when someone in a household has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000.
- Only those earning more than £60,000 will lose the entirety of the benefit.
- Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% – from 0.7%.
- Forecast for 2013 is 2%, for 2014 is 2.7%, and in each of the two years after that 3%.
- Eurozone growth forecast for this year revised down from 0.5% to -0.3%.
- UK inflation forecast to fall from 2.8% this year to 1.9% next year.
- Borrowing this year to be £126bn – £1bn less than forecast in the autumn. Predicted to be £120bn in 2012-13 and £98bn in 2013-14. Forecast to fall to £21bn by 2016-17.
- Consultation to be held on offering gilts – government bonds – with maturity terms of more than 50 years.
JOBS AND SKILLS
- OBR forecasts unemployment to peak this year at 8.7% before falling each year to 6.3% by 2016-17.
- One million more jobs to be created in the economy over five years, OBR says.
- From midnight, new stamp duty level of 7% for homes worth more than £2m. Any such homes bought through companies will pay 15%.
- Extra funding to help construction firms building new homes.
HELP FOR BUSINESS
- Corporation tax cut to 24% from next month. By 2014 it will fall to 22%.
- Enhanced capital allowances for businesses setting up in new Scottish enterprise zones in Dundee, Irvine and Nigg. A Welsh enterprise zone to be created in Deeside.
- Consultation on simplifying the tax system for small firms with a turnover of up to £77,000.
- Government support for £150m of tax increment financing to help councils promote development and an extra £270m for the Growing Places fund.
- Tax relief for the video games, animation and high-end television production sectors.
- Government considering enterprise loans for young people to start their own business.
- Relaxation of Sunday trading laws on eight Sundays during Olympics and Paralympics, starting July 22.
- Cost of operations in Afghanistan to be £2.4bn less than expected.
- Money saved will provide an extra £100m to improve military accommodation.
- Personnel serving overseas will receive 100% relief on an average council tax bill.
- Families welfare grant also doubled.
- Government evidence to be published on the case for regional public sector pay.
- Option for government departments to move to regional pay structures for civil servants when current freeze ends.
- “Major package of tax changes” to boost oil and gas extraction in North Sea, along with £3bn new field allowance west of Shetland.
FUEL, CIGARETTE AND ALCOHOL DUTIES
- Duty on all tobacco products to rise by 5% above inflation from 18:00 today – the equivalent of 37p on a packet of cigarettes.
- No change to existing plans on alcohol duty.
- New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings.
- No change to existing plans on fuel duty. Vehicle excise duty to rise by inflation, but frozen for road hauliers.
- Existing fair fuel stabiliser means above-inflation rises in fuel duty will return only if price of oil falls below £45 ($70) a barrel.
- Automatic review of state pension age to ensure it keeps pace with increasing lifespans.
- New single-tier state pension for future pensioners to be set at about £140 and based on contributions.
TRANSPORT AND INFRASTRUCTURE
- Extend electrification of the Transpennine route between Manchester and Sheffield. Further improvements to the lines between Manchester and Preston, and Manchester and Blackpool.
- Report on the future of aviation in south-east England to be published in the summer.
- Funding for superfast broadband and wi-fi in the UK’s 10 largest cities.
OTHER TAXES AND ALLOWANCES
- Bank levy to be increased to 0.105% from January 2013 “to ensure that corporation tax cuts do not benefit the banks”. The levy will raise £2.5bn a year.
- New cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year, but no significant change to pensions relief.
- VAT loopholes and anomalies to be removed – including removing exemptions for sports nutrition drinks and hot takeaway products in supermarkets.
- Existing exemptions will remain for food, children’s clothes, books and newspapers.
- Personal tax statement to be sent to 20 million taxpayers from 2014.
- Government to seek “major savings” in the administrative cost of the Carbon Reduction Commitment, and bring forward an alternative environment tax this autumn if such savings cannot be found.
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