Taxbriefs Commentary Library

An End to the Rumours

John Housden, 22 Mar 2012


 

Such were the volume of rumours that preceded it, the 2012 Budget threatened to be little more than a dose of déjà vu. In the event, there were some surprises to be found amongst the many correctly leaked announcements. On the personal tax front, the main points of interest were:

  • 2013/14 will see a £1,100 increase in the personal allowance to £9,205 and a £1,025 reduction in the higher rate threshold, creating yet more higher rate taxpayers.
     
  • Child benefit will be phased out where individual income is between £50,000 and £60,000, creating a new £10,000 band of income with an effective marginal tax rate of at least 50.6%.
     
  • A cut in the top rate of tax from 50% to 45% (42.5% to 37.5% for dividends) from 2013/14. As happened when the 50% rate was first announced, this is likely to encourage a shift of income receipts and relief claims between tax years. Expect a flood of dividends on 6 April 2013.
     
  • No changes are to be made to the main pension tax reliefs, leaving the annual allowance at £50,000 (for now).
     
  • There will be an effective £3,600 total annual premium cap on qualifying life policies (eg maximum investment plans) from 2013/14, with transitional protection for existing policies.
     
  • New rules will prevent the structuring of investment bonds as interdependent clustered policies to defer tax liabilities.
     
  • Further tightening of the company car tax rules, will increase tax charges all the way through to 2016/17.

Taxbriefs are still able to produce you a personalised 2012 budget summary in PDF format to send your clients and personalised Tax Tables for 2012/13.

Call 020 7970 4142 for further details and to place your order.

 


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John Housden

Editorial Consultant

John Housden is a qualified actuary who has worked in the personal financial services industry for 40 years.

A former technical director for a life company and longstanding contributor to a wide variety of Taxbriefs publications.

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