George Osborne made his Autumn Statement on Tuesday against the backdrop of the global economy still struggling to recover from the credit crunch and recession. The general consesus was that he wanted to get all the bad news out of the way in one go and there was nothing really uplifting in this Budget. Below is a summary of the key highlights:
State benefits and tax credits
State pension age will rise from 66 to 67 from 2026, eight year earlier than originally planned
Basic state pension will be increased in line with the 'triple lock' guarantee. It will increase by £5.30 to £107.45 per week for a single pensioner and by £8.50 to £171.85 for pensioner couples.
Pension credit - the minimum income guarantee within pension credit will be increased by 3.9% to £142.70 per week for a single pensioner and £217.90 per week for pensioner couples .
Child tax credit (CTC). The child and disability elements of CTC will increase in line with CPI (5.2%) in 2012/2012. The planned £110 above inflation increase will no longer go ahead.
Working tax credit. The disability elements of the working tax credit will also increase in line with CPI in 2012/2013. However the couple and lone parent elements will be frozen. From April 2012 eligibility for WTC will be changed. Couples will need to work 24 hours between them with at least one working 16 hours. If only one works, it must be for a minimum of 24 hours. Currently just one individual in the couple must be working at least 16 hours.
Child benefit - no further changes other were announced. As already advised, from January 2013 child benefit will be withdrawn for families with at least one high rate tax payer.
Most working age and disability benefits will increase by CPI (5.2%) in 2012/2013.
Income Tax and National Insurance
As already announced, from April 2012 there will be a further substantial increase in the personal allowance - it will increase to £8,105. There will also be a corresponding decrease to the basic rate limit, reducing from the 2011/2012 level of £35,000 to £34,370 for 2012/2013. The higher rate threshold remains at £42,475. The increase in the personal allowance means that basic rate taxpayers who remain within the reduced basic rate band will be £126 better off in 2012/2013.
Capital Gains Tax
The capital gains tax exemption will be frozen for 2012/2013 at £10,600.
Seed Enterprise Investment Scheme
The Government will launch a new tax advantaged investment in April 2012, the Seed Enterprise Investment Scheme (SEIS). This aims to attract investment into new start up companies by offering generous tax incentives. The scheme will offer 50% income tax relief for individuals investing in qualifying companies and it will also offer capital gains tax benefits. A CGT exemption will be available for gains on assets disposed of and reinvested through SEIS in the 2012/2013 tax year. The annual investment limit for individuals will be £100,000 with a cumulative investment maximum for couples of £150,000.
Venture Capital Trusts
The government plans to remove the £1 million investment limit per company for VCT's
Corporation Tax
A 1% cut to the main rate of corporation tax to 25% from April 2012
Successive reductions of 1% each year to a rate of 23% by 1st April 2014
No announcements on the smaller profits rate which is currently 20%
Small business rate relief holiday
Small businesses will benefit from an extension to the small business rate relief holiday for a further six months - from 1st October 2012 to April 2012. Additionally the government will provide businesses with the opportunity to defer 60% of the increase in the 2012-2013 business rates bills based on the RPI uprating which will be repaid equally over the following two years.
National Loan Guarantee Scheme
This will provide up to £20 billion of guarantees for bank funding over two years. This is intended to permit banks to offer lower cost lending to smaller businesses.
Fuel Duty
The planned increased in fuel duty of 3 pence per litre on 1st January 2012 has been deferred to 1st august 2012 whilst the original planned 5 pence planned increased in August 2012 has been scrapped.
Rail Fares
The increase in rail fares each January (normally 3% above RPI) is to be limited to 1%. This still means a likely increase of about 6%
Air Passenger Duty (APD)
Increases to APD from 1st April 2012 and 1st April 2012 are proceeding as planned.
Inheritance Tax
No significant announcements were made on Inheritance Tax, despite there being much speculation about further restrictions in business property relief being introduced.
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