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Wednesday, March 21, 2012

The Budget - Summary and Details

Here is a link to the details of today's Budget as per HMT:

Budget

Whilst here are the headlines of today's budget (source):

Tax changes

The personal allowance will rise to £9,205 in April 2013
  • The top rate of Income Tax will reduce from 50 per cent to 45 per cent in April 2013.
  • The Income Tax personal allowance (the amount you can earn before you pay tax) will increase to £9,205 in April 2013.
  • Age related allowances will be frozen from April 2013, moving towards a simpler, single personal allowance for everyone regardless of age.
  • From 2014-15, taxpayers will receive a new Personal Tax Statement, telling them how much Income Tax and National Insurance they have paid and what their money is being spent on.
  • Income Tax reliefs that aren't already capped will be capped at £50,000 or 25 per cent of income, whichever is higher.
  • The main rate of Corporation Tax will reduce by an additional 1 per cent from April 2012.
The new Income Tax rates for the 2012-13 tax year were published in December 2011 and will start on 6 April 2012.

Benefits

Child Benefit will be withdrawn for households where someone has an income of more than £50,000
  • Child Benefit will be withdrawn when someone in a household has an income of more than £50,000. The benefit will be withdrawn gradually; 1 per cent of Child Benefit for every extra £100 earned over £50,000. Only those with an income of more than £60,000 will lose all their Child Benefit.
  • Servicemen and women serving in operations overseas will receive 100 per cent relief on an average Council Tax bill.
The new rates for the State Pension and benefits for 2012-13 were published in December. These rates start in April 2012.

Alcohol and tobacco

  • Duty rates for alcohol will rise on 26 March 2012 at the same rate as last year - two per cent above inflation. The government will shortly be publishing an Alcohol Strategy to address alcohol abuse.
  • Duty on tobacco will rise by five per cent above inflation - a rise of 37p on a pack of cigarettes. This will come into force at 6.00 pm on 21 March 2012.

Motoring and travel

  • Vehicle Excise Duty (car tax) will increase by inflation only.
  • The government will take forward many of the recommendations from Alan Cook’s independent review of the road network, including developing a national roads strategy.
  • The government will also consider new ownership and financing models for the national road network.

Housing

  • A new Stamp Duty Land Tax rate of 7 per cent will be introduced for residential properties over £2 million from 22 March 2012.
  • The Stamp Duty Land Tax charge applied to residential properties over £2 million bought into a corporate envelope will be increased to 15 per cent from 21 March 2012. There will be a consultation on the introduction of an annual charge on £2 million residential properties which are already contained in corporate envelopes.
  • A New Buy Scheme was introduced last week to help those who cannot afford the larger deposits that some mortgage companies demand.
  • The government will fund an extra £100 million of improvements in the accommodation of the armed forces and their families.

Pensions

  • The current system, where pensioners can receive an additional State Pension as well as their basic pension, will be simplified. This means that future pensioners will receive only one single-tier pension, based on contributions. This is currently estimated at around £140.
  • There will be an automatic review of the State Pension age to ensure it keeps pace with increases in life expectancy. Details of how this will work will be published this summer.
  • There will be no changes to pension relief.

Employment

Digital economy

  • The government has committed to providing 90 per cent of the population with access to superfast broadband.
  • There will be improved mobile phone coverage for rural areas and along key roads.
  • Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle are to become broadband super-connected cities, as part of the £100 million investment announced at the 2011 Autumn Statement.
  • £50 million will be used to fund a second wave of smaller cities.

The economy

The UK economy is predicted to grow by 0.8 per cent this year, and 2 per cent in 2013
  • The independent Office for Budget Responsibility’s (OBR) forecasts for UK growth and inflation are broadly unchanged from its November forecasts.
  • Growth: its growth forecast for the UK this year is 0.8 per cent; they forecast growth of 2 per cent in 2013, 2.7 per cent in 2014, and 3 per cent in 2015 and 2016.
  • Inflation: expected to fall from 2.8 per cent this year to 1.9 per cent next year, and then 2 per cent by 2016
  • The OBR’s forecast for the unemployment rate is unchanged from last Autumn - the rate is expected to peak this year at 8.7 per cent and fall to 6.3 per cent by 2016.
  • Borrowing: public sector net borrowing (PSNB) is expected to total £126 billion this year, falling to £120 billion next year. It is then forecast to to fall to £98 billion in 2013-14, reaching £21 billion by 2016-17.

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