People have been warned!
That was the key message from the Chancellor as he promised a stable economy, a fairer, more efficient and simpler tax system, and reforms to support growth. This year’s Budget had proposals for both now and in the future, and a few surprises.
Many of the proposals were designed to promote business, but at the same time to ensure that high earners do not shelter large amounts of income by using legitimate tax reliefs or avoid taxes by means of avoidance schemes.
The Chancellor was also keen to highlight that the lowest earners will fall outside the tax net, and that the tax position for pensioners will be simplified.
Here are the highlights:
- An increase in the personal allowance to £8,105 from 6 April 2012 with a further increase of £1,100 pledged by 2013;
- A reduction in the 50% tax rate to 45% from 6 April 2013;
- The main corporation tax rate will be reduced to 24% (instead of 25% as previously announced) from 1 April 2012 with further reductions to 22% by 2014;
- The £120,000 per employee EMI limit will be increased to £250,000 by way of a Statutory Instrument as soon as possible;
- The availability of entrepreneurs' relief for EMI option holders from 2013;
- A cap on income tax reliefs of 25% of income where the taxpayer is claiming more than £50,000 of reliefs. This will exclude reliefs with their own caps such as EIS and pensions;
- The introduction of a 15% Stamp Duty Land Tax (SDLT) rate for residential properties worth over £2m and which are purchased through "non-natural persons" (including companies). There will also be consultation on the implementation of an annual charge on these entities based on the property value as well as a possible change to the capital gains tax treatment where UK properties are disposed of by these entities;
- SDLT will increase to 7% from tomorrow for properties worth over £2m. Where contracts have already been exchanged transitional rules mean that the old rates will apply;
- The immediate introduction of a number of specific anti-avoidance provisions and the introduction of a General Anti-Abuse Rule (GAAR) from 2013;
- Fundamental VAT changes targeted at hot take away food and catering premises, sports nutrition drinks, hairdressers, holiday caravans, Low Value Consignment Relief, self-storage and approved alterations to listed buildings.
Download our comprehensive Budget review here.