A brief guide to the 2012 budget

Lorraine Dale from Rightway Accounting Services has supplied us with this brief guide to the 2012 Budget 

I am sure budgets are getting more boring! There never seems to be anything truly revolutionary, and this budget is another case in point.

Welcome news is the increase in personal allowances which will benefit everyone and take a lot of people on low incomes out of the tax bracket. For 2012/13 this will be £8,105 and for 2013/14 it will go up to £9,205 – one of the biggest increases for some time!

Don’t forget though that if you are a higher rate tax payer, the threshold at which you will start to pay higher rate tax has fallen, so if your taxable income exceeds £34,371 you will now be into the 40% bracket.

Is this  Budget a serious case of granny bashing? It seems unfortunate that the age related personal allowances will be frozen, but with the personal allowance guaranteed to increase in due course up to £10,500 and with the increase in pension, this will not be as hard on pensioners as the press will have you believe.

More welcome news is the reduction in the main rate of Corporation Tax paid by companies from 26% to 22% by 2014. Although this does not affect the majority of very small companies who only pay CT at 20% anyway, this will be a big help to many of the slightly bigger and growing companies over the next couple of years.

Take special note that the level of turnover you need to reach before you register for VAT has increased from £73,000 to £77,000.

It seems to be a bit of a political gesture to reduce the highest tax rate from 50% to 45% from 2013, but hopefully this will revitalise the incentive to work harder without fear of 50% of your income being taken away if you do well.

If you were expecting a sudden wave of mansions for sale at a reduced price, then be disappointed as the increase in Stamp Duty Land Tax to 7% on properties worth over £2million takes effect from today. However this may mean that many properties originally valued at around that price will now choose to sell for less as this will only attract stamp duty at 5%. Keep your eyes open for a bargain!!!! 

This is of course just a summary of the some of the main points of the budget. Do contact Lorraine for more information or if you need clarity on any of the points.