Contact us

No doubt you’ve seen the headlines, and maybe read various 2012 Budget reports, so below are the key snippets we feel are most relevant to our clients.  Please give us a call to chat about any questions you may have.

Tax Implications

  • What
  • The Government will increase the personal allowance by £1,100, taking it to £9,205 in 2013.  An increase to £8,105 had already been announced for April 2012.
  • When
  • 6th April 2013
  • What this means
  • This is a significant increase in the basic rate tax allowance. The full allowance is only available to those earning under £100,000 – as is the case currently.
  • Where an individual’s income exceeds £100,000, the level of the basic personal allowance will be reduced by £1 for each £2 over £100,000 until it reaches zero.
  • This means that the basic personal allowance will reduce to zero where adjusted net income is £116,210 or more.So if you have income in the band between £100,000 and £116,210 (or just above £116,210) a part of that income will be taxed at 60%. . . .
  • Speak to us about ways to reduce your overall tax charge, as pension contributions could generate 60% tax relief.

 

  • What
  • Freezing Age Related Allowances.
  • When
  • 6th April 2013
  • What this means
  • Pensioners currently have higher personal allowances and these additional allowances will be frozen and reduced over time, bringing them in line with the standard personal allowance.
  • Those currently receiving the higher allowances won’t see them reduced, although inflation will reduce pensioner income in real terms.

 

  • What
  • A reduction from 50p to 45p on the top rate of tax on incomes above £150,000.
  • When
  • 6th April 2013
  • What this means
  • This reduction in top rate tax provides serious tax planning opportunities!
  • The best of these is probably in relation to pensions. 50% tax relief now (but only until April 2013), 25% tax free cash, and take your residual pension at a possible top rate of 45% – a great deal to pay tax at lower rates.
  • Add to that death benefits held on trust and tax free gains, pensions are looking good.

 

 Housing

  • What
  • Increase in Stamp Duty for houses worth over £2m to 7%.
  • When
  • 22nd March 2012
  • What this means
  • The ‘mansion tax’ that was widely reported prior to the Budget equates to a £140,000 tax bill on a £2m property.
  • The Chancellor has also put in place measures to stop individuals paying stamp duty by purchasing a residential property through a company.
  • Such purchases will now incur a 15% tax charge.

 

 Tax Credits and Benefits

  • What
  • Child Benefit to be withdrawn for higher earners.
  • When
  • April 2013
  • What this means
  • Only households where someone has an income in excess of £60,000 a year will no longer gain from child benefit.
  • There will be a tapering of the benefits received from £50,000 – £60,000.
  • Get advice if your income falls into this bracket – pension contributions and salary sacrifice could reduce income so you gain from the full benefits available.

 

Savings, Pensions and Investments

  • What
  • Introduction of initial flat-rate pension of £140 per week for those with 30-year national insurance record.
  • When
  • 2016
  • What this means
  • This long awaited measure to simplify the pension system is welcome news. Those that will lose out are higher earners who may have seen higher levels of state benefits; some low earners will see an increase in their pension entitlement.

 

  • What
  • Auto review of state pension age.
  • When
  • Proposals will be published at the time of the Office for Budget Responsibility’s (OBR) 2012 Fiscal sustainability report.
  • What this means
  • The link between State Pension Age and longevity has been confirmed which means there will be an automatic review of state pension age.
  • State Pension Age is already scheduled to rise to 67 by 2026 for both men and women. This link means the state pension age could keep increasing if longevity increases. It is forecast to do so, so your pension age could be unknown.
  • You need to take control of your own pensions so you have choice of when to retire.

Business

  • – The introduction of a new cash basis for calculating tax for small businesses – the aim is to create a simpler tax system for smaller firms with a turnover of less than £77,000. Consultation will take place before the proposed implementation from April 2013.
  • – The Government is increasing the funds available to invest through the Business Finance Partnership to £1.2 billion.
  • – The Government will pilot the best way to introduce a programme of enterprise loans to help young people set up and grow their own business.

 

Send to a friend: