The 2012 Budget Summary

So budget day is here in the UK and after days of speculation, we finally know what fate financially awaits us at the hands of the coalition government!  They call it addressing the country’s debt, others have termed it the “break up” budget referring to the capacity for financial stresses to impact on relationships, but what will it actually mean to you?

What We Already Knew 

  • Benefits to jump next month as linked to inflation.  Benefits linked this way include:
    • Jobseekers
    • Income Support
    • Most income tax allowances
    • National Insurance Thresholds
    • Inheritance tax allowance
    • Disability benefits
    • Maternity benefits
    • Incapacity Benefits
    • Child Benefit
  • Chid element of child tax credits to rise by £135 in 2012/13
  • The couple and lone parent element of working tax credit will not go up in line with inflation
  • Couples to have to work 24 hours between them (not 16) to qualify for working tax credit.  One member of the couple will have to work for at least 16 hours.
  • Fuel duty to rise 3.02 p per litre on 1 August 2012

What we now know as well

The Key Points:

  • From April 2012, the 50p top rate of tax will be cut to 45p
  • Personal income tax allowance to be raised to £9205 from April 2013 (that’s £220 pa in 24 million people’s pockets)
  • Child Benefit to be phased out when someone in a household earns over £50,000 falling by 1% for every £100 earned over £50,000.
  • No child benefit for those earning over £60,000
  • From 6 pm today duty to rise by 5% above inflation on all tobacco products
  • New duty on gaming machines set at standard rate of 20% and lower rate for low-prize machines of 5% of net takings
  • 3.02p per litre fuel duty remains in place to take effect 1 August (no changes in budget)
  • Vehicle excise duty to rise by inflation, but frozen for road hauliers
  • The fair fuel stabilizer remains in existence so that it will return if oil falls below £45 a barrel
  • No changes in duty rates on alcohol
  • VAT loopholes and other anomalies to be removed including exemptions on sports nutricion drinks and hot takeaway in supermarkets
  • VAT exemptions to remain for food, children’s clothes, books and newspapers
  • From 2014, 20 million taxpayers will receive a personal tax statement

And everything else in brief:

TAX

Pensions

  • 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 approx. £140 and based on contributions
  • Allowances to be frozen for those already of pension age

Personal Allowances

  • Personal income tax allowance to be raised to £9205 from April 2013 (that’s £220 pa in 24 million people’s pockets)
  • From 2014, 20 million taxpayers will receive a personal tax statement

Income Tax

  • From April 2012, the 50p top rate of tax will be cut to 45p

Tax Relief

  • Tax relief cap set at 25% of total income for anyone claiming more than £50,000 in a year.
  • No significant change to pensions relief

Corporation Tax

  • Corporation tax cut to 24% from April 2012 falling to 22% by 2014
  • Consultation on making the tax system simpler for smaller firms with turnovers under £77,000

Bank Levy

  • Bank levy to be increased to 0.105% from January 2013.

Tax Dodging

  • New general anti-tax avoidance rule to be introduced

VAT

  • VAT loopholes and other anomalies to be removed including exemptions on sports nutricion drinks and hot takeaway in supermarkets
  • VAT exemptions to remain for food, children’s clothes, books and newspapers

LEISURE

  • No changes to duty rates on alcohol
  • From 6 pm today duty to rise by 5% above inflation on all tobacco products
  • New duty on gaming machines set at standard rate of 20% and lower rate for low-prize machines of 5% of net takings

PETROL

  • 3.02p per litre fuel duty remains in place to take effect 1 August (no changes in budget)
  • Vehicle excise duty to rise by inflation, but frozen for road hauliers
  • The fair fuel stabilizer remains in existence so that it will return if oil falls below £45 a barrel

STAMP DUTY

  • From midnight, new stamp duty level will be 7% on homes over £2m.  If bought through companies this will be 15%.

CHILD BENEFIT

  • Child Benefit to be phased out when someone in a household earns over £50,000 falling by 1% for every £100 earned over £50,000.
  • No child benefit for those earning over £60,000

ECONOMY

Growth

  • Independent Office for Budget Responsibility revises UK growth forecast for 2012 to 0.8% from 0.7%
  • Forecast for 2013 is 2%
  • Forecast for 2014 is 2.7%
  • Forecast for 2015 and 2016 is 3% each year

Inflation

  • UK Inflation forecast to fall from 2.8% this year to 1.9% next year

Borrowing

  • Borrrowing for this year to be £126bn with predictions to reduce to £120bn (2012/13) and £98bn(2013/14).

Unemployment

  • Forecasts for unemployment to reach 8.7% this year and then fall each year to 6.3% (2016/17)

TRANSPORT

  • Transpennine route upgrade between Manchester and Sheffield
  • Improvements to the lines between Manchester and Preston and Manchester and Blackpool
  • Summer 2012 – report on the future of aviation in SE England to be published.

ENERGY

  • £3bn new field allowance for west of Shetland
  • Major package of tax changes to boost extraction of oil and gas in North Sea

TECHNOLOGY

  • Tax relief for the video games, animation and high-end television production sectors.
  • Consideration to be given to enterprise loans for young people to start their own business.
  • £100 million of support for new university science research facilities.

PUBLIC SECTOR

  • 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.

SUNDAY TRADING HOURS

  • Relaxation of Sunday trading laws from July 22 during the Olympics and paraolympics.

ARMED FORCES

  • Cost of operations in Afghanistan to be £2.4bn less than expected
  • The money saved will provide an extra £100m to improve military accommodation
  • 100% relief on average council tax bills for those serving overseas.
  • Families welfare grant also doubled

GREEN MEASURES

  • Savings to be highlighted in the administrative costs of the Carbon Reduction Commitment or failing that the alternative environment tax is to be brought forward this autumn.

This budget summary was prepared by RESET parenting as a guide to today’s budget.  If you need more information or any other help with your finances we recommend Citrus Financial Management Ltd who can advise more.  They can be found on-line at  www.citrusfinancial.co.uk or on facebook at www.facebook.co.uk/citrusfinancial

Advertisements
This entry was posted in Uncategorized and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s