Chelmsford Financial Management LLP

Budget March 2012

The Economy

The Independent Office for Budget Responsibility (OBR) has revised upwards the UK forecast for 2012 from 0.7% to 0.8%.   The forecast for 2013 is 2%, for 2014 2.7% and for 2015/16 3%.   UK inflation is set to fall from 2.8% for 2012 to 1.9% for 2013.

Pensions

WEF April 2013 a new single-tier state pension will be introduced to be set above the means test at a minimum of £140 a week.   The Government is due to examine linking the state pensions age to life expectancy.

Child Benefit

This will be phased out when someone in a household has an income of more than £50,000, decreasing by 1% for every £100 earned over £50,000.   Only those earning more than £60,000 will lose the benefit completely.

Tax

WEF 21 March 2012

• there is a new 7% stamp duty on properties worth more than £2m
• there are also plans (15% stamp duty rate on properties worth over £2m within corporate envelopes) to clamp down on stamp duty avoidance by using companies to buy expensive properties.

WEF April 2013

• the 50p top rate of tax levied on earnings of £150,000 or more will be cut to 45p
• the personal income tax allowance will be increased to £9,205
• age-related income tax allowances will be removed for new pensioners and replaced with the same personal allowance as the rest of the UK
• there will be a new cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year
• Corporation tax will be reduced to 24%, with a further 1% reduction in 2013 and in 2014.

There will also be a simplified tax return process for small firms with a turnover of up to £77,000.

WEF April 2013/14

• the higher income tax band will be reduced from £42,475 to £41,450.