Chancellor George Osborne delivered the 2012 budget this afternoon at the House of Commons. Here is our summary of the key points affecting our clients:
According to the Office for Budget Responsibility, the economy has picked up “a little more momentum into the new year than was expected”. As a result they have revised Britains growth predictions to: 0.8 per cent this year, 2 per cent in 2013, 2.7 in 2014 and 3 per cent by 2015.
Government borrowing is £11 billion less than was predicted in November, and the OBR says the coalition is on course to eliminate the current deficit by 2017. “There will be no deficit funded giveaways today” said the Chancellor in his opening speech.
The Chancellor announced the biggest ever increase in the threshold at which income tax starts to be paid, from £8,105 to 9,205. He also announced that the 50p tax rate has raised just a third of the amount it was supposed, and announced that it would be dropped to 45p. Both of these personal tax changes will take effect from 2013.
A 2 per cent increase in stamp duty on properties worth more than £2 million will come into effect from midnight tonight. George Osborne also announced plans to clamp down on tax evasion in this area, which he describes as morally repugnant.
All taxpayers will be given a statement breaking down the total amount of tax they have paid and what it is being spent on. No changes will be made to fuel duty plans, while vehicle excise will be frozen for road hauliers and increase only with inflation for everyone else.
The Corporation tax headline rate will be dropped to 24 per cent this year with further drops in subsequent years bringing it down to 22 per cent, one of the most competitive rates worldwide described by the Chancellor and an “advertisement for jobs and investment in Britain.”
An above the line tax credit for research and development, as demanded by several business groups, will come into effect next year.
A consultation on simplifying tax arrangements for small firms with turnover up to £77,000 will take place, aiming to save such companies significant administration costs as well as reducing their actual tax burden.
The levy on banks will be increased from January 2013, so that they do not benefit from the corporation tax cut.
The much discussed New Loan Guarantee Scheme will be rolled out and should provide £20 billion in finance to firms with turnover up to £50 million at below market rates.
The Chancellor wants to double the UK’s exports to £1 trillion within a decade, saying that Britain would not be left behind the world’s fastest growing economies.
A more detailed analysis of the budgets implications will follow..