2012 Budget

The main things to be concerned about in the March 21st 2012 Budget are:

  • From April 2013, the 50% additional rate of income tax will be cut to 45% and to 37.5% from 42.5% for dividends.
  • The personal income tax allowance will rise to £8,105 from April 2012 and to £9,205 from April 2013. There will also be a freeze on existing age-related allowances from 6 April 2013.
  • The basic rate tax limit reduces from £35,000 to £34,370 for 2012/2013 and £32,245 for 2013/2014.
  • The State Pension will reform into a single tier pension for future pensioners and future increases in State Pension Age will take account of increases in longevity.
  • The main rate of corporation tax will be cut to 24% from next month. By 2014 it will fall to 22%.
  • Qualifying policy investments will be restricted to an annual premium limit of £3,600 from 6 April 2013, with transitional rules applying from 21 March 2012.
  • The capital gains tax exemption remains frozen for 2012/2013 at £10,600.
  • On the inheritance tax front, the Government is consulting on a range of topics. They include increasing the exempt amount that someone living permanently in the UK can transfer to a spouse or civil partner living permanently outside the UK.

A good concise summary of everything can be downloaded here:  budget 2012


Tax Year-end Planning: ISA allowances in 2012/13

ISAs and JISAs current and new allowances 2011/12 and 2012/13: Current ISA allowance is 10,680 and will be £11,280 after April 5th. You can invest £21,960 right now for both tax years – please call 0845 013 6525 for details. Don’t forget JISAs are now available to all children born after January 2, 2011, or before September 1, 2002 who are aged under 18. Allowance is £3,600 p.a., so £7,200 can be invested in aggregate over next couple of weeks

Tax Year End Planning: Pensions 2

  • If you are in the process of arranging an annuity with a pension fund containing Protected Rights and you are married or in a civil partnership, you are currently obliged to provide for a 50% dependent’s pension. From April 6th 2012 the requirement to include this requirement is being removed. 
  • The threshold for payment of trivial commutation lump sums is being fixed at £18,000 rather than 1% of the Standard Lifetime Allowance (which falls from £1.8million to £1.5 million). This applies to the aggregate pension holdings (or deferred rights) of an individual excluding State pensions.