In the Budget today George Osborne announced that the personal allowance would be increased to £11,000 a year with effect from the 2017/18 tax year. This will be preceded by another increase in the personal allowance to £10,800 for the tax year 2016/17.
There have been a number of increases in the personal allowance over the last few years and these increases come after the recent increase in the personal allowance for the year 2015/16 to £10,600.
A number of changes were announced by the Chancellor George Osborn yesterday, but there were only a couple of changes that affected UK tax allowances.
Key Points from the UK Budget 2013 with regard to UK Tax Allowances:
The plan was always to increase the personal allowance to £10,000 by 2015 but this has now been brought forward by a year and the £10,000 UK tax allowance will now be effective from 6 April 2014. This is the amount that people can earn before being charged any income tax. However, National Insurance contributions are still payable on earnings over £7,606 at the rate of 12%.
Corporation tax will decrease from April 2015 to 20% from the previous rate of 21%, which in itself is payable from April 2014. In fact the rate has been reduced significantly from the 28% it is in 2012/13 to 24% in 2013/14, giving the UK one of the lowest rates of corporation tax.
The Chancellor of the Exchequer, George Osborne, announced in the budget today that the age related personal allowances will be scrapped in the coming tax years. This will mean that people who reach 65 in 2013 will lose money. Continue reading Age Related Personal Allowances to be Scrapped
Today was the annual budget announcement by the Chancellor of the Exchequer, George Osborne. Many changes were anticipated in this budget with possibly the most reported being changes to the UK personal allowances which the Liberal Democrats have agreed with the coalition government should be increased eventually to £10,000 per annum by 2015. Whether the increase of the allowance to this level will be accelerated was a topic of much discussion.
Added to that were questions about fuel duty which is a bugbear of the UK, as they have such a high rate of tax making it one of the most expensive countries in the world for fuel.
So, after all the hype the most pertinent points in the UK budget for the ‘common man’ (and woman!) are listed below. Obviously there are many more points to report but this article is just to give the overview on the things in the UK Budget 2012 that affect us most in our everyday lives.
UK Tax Allowances: In line with the plan to increase the UK Personal allowance to £10,000, the Chancellor has announced the largest increase ever in the personal allowance of £1,100 to make the allowance £9,205 from the tax year 2013/14. This will mean that most people who earn above this amount will save £220 a year in tax.
However, age related allowances will eventually be scrapped as they are considered confusing and cause extra administration. Pensioners will not in effect suffer any financial loss because of the increase in the general personal allowance, but they will not be given any extra allowance on top of this.
Tax Rates: The only change is in the higher rate tax band which will be reduced from 50p to 45p as the band has been shown not to be fiscally viable.
Child Benefit: It was previously announced that anyone paying higher rate tax would not be entitled to child benefit but this has been clarified and slightly revised so that there is a tapered system and not just a cut off. The amount of child benefit will be reduced by 1% for every £100 earned over £50,000.
Fuel: Fuel duty will not rise and this will remain the case unless the price of oil drops below £40 a barrel in which case this can be reviewed. So no change at the pumps for the present time.
Alcohol: the chancellor said that he was not making any further changes to the alcohol duty increases that were set out by his predecessor.
Smoking: There will be an increase in the duty on cigarettes and tobacco of 5% and this will be effective from midnight tonight (21st March 2012). This will put an average of 37p on a packet of cigarettes. The reason that the Chancellor introduced this is that smoking is the biggest cause of preventable illness and death in the UK and there is evidence that increasing the rate of duty on smoking encourages more people to give up or reduce their intake.
Stamp Duty: The only change to stamp duty land tax does not effect the everyday housebuyer. In order to stop avoidance of stamp duty, a tax rate of 15% was introduced for residential property being bought under the umbrella of a company and a rate of 7% introduced for properties over the value of £2m. Effective Midnight tonight.
Corporation Tax: Corporation tax has been cut and will be cut further to 24% from next month. It will also be reduced so that over the next 2 years it will decline to 22% – one of the lowest rates in the world, to encourage investment in Britain.
Armed Forces’ Families: Extra relief will be given to families of those deployed with a 100% relief on council tax and the operations allowance and welfare grant doubled.
Further Budget Issues
Gambling duties for online sites will be based on the location of the consumer and not the company providing the service. This is because companies have been forced to set up overseas so that they don’t have to pay the higher tax rates that apply in Britain. 90% of online gambling sites are offshore.
Each individual will be sent a statement detailing how much tax they are paying and what services that money is going towards, including how much of that tax is funding the deficit and how much is contributing to public spending.
There will be a restriction as to how much higher earning individuals can use tax relief schemes to offset the amount of tax that they pay. At the moment the reliefs are unlimited but for anyone claiming more than £50,000 in relief this will be restricted to 25% of their earnings.
Vehicle duty will be increased but will be frozen for haulage contractors.
There will be a continuous review of the State Pension Age to keep it in line with longevity factors.
Network rail will be expanding some of the rail networks in the North including rail lines in the Manchester to Sheffield area.
The government will be backing the Life Sciences sector. At present 1/5 of new medicines are developed in the UK and there will be reductions in the taxes on patents. There will also be an centre for excellence in the field of aerodynamics set up where Britain already leads the way. Added to this there will be schemes to encourage investment in development of video games, animation etc. As George osborne said “Keep Wallace and Grommet where they are!”.
The government will be funding ultrafast broadband in 10 cities: Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and London.
There will be an overhaul of planning regulation particularly so that we can get investment from abroad that is currently going elsewhere because they can’t get planning consent.
Legislation will be introduced to relax Sunday trading laws for 8 Sundays starting 22 July in line with the Olympics being held in London.
They will be exploring the idea of enterprise loans for young people to start their own businesses.
Tax on small firms will be on the basis of cash that passes through – those with a turnover up to £77k – this will make tax simpler for 3m firms.
They will be moving forward with integration of NI and tax. They will address loopholes in the current VAT regulations e.g. where VAT is different when paid on takeaways from the high street and those from a supermarket.
So after much speculation by the media, the Chancellor of the Exchequer, George Osborne has announced in the Budget today what the increase in the UK personal allowance will be for the tax year 2013-14. Continue reading New Personal Allowance Set in Budget
The Uk Budget statement from the Chancellor of the Exchequer, George Osborne, takes place today at 12.30pm. There have been many assumptions as to what will be announced in the budget but for the sake of clarity we will be leaving any announcements here until they actually take place. Continue reading UK Budget Today
The UK budget generally takes place in March of each year although there is provision to have an interim emergency budget which did happen in October 2010. If you are wondering ‘when is the UK budget?‘ then the answer is that it will take place on Wednesday 21st March 2012 at 12.30pm. Continue reading When is the UK Budget for 2012?
As was outlined in the 2010 Emergency budget (see below) the rate of personal allowance will increase by £1,000 to £7,475 per annum. This will then be increased again in April 2012 to £8,015 per annum. 50% rate of income tax to remain for the time being.
Corporation tax reduced by 2% in April to help boost the economy.
There was help announced for first time homebuyers with £250m set aside for 10,000 new homeowners.
The way that the Chancellor plans to make up for tax cuts is to cut down on tax avoidance which costs the country billions of pounds a year.
No change in alcohol duty. Slight change in tobacco duty so that roll ups and manufactured cigarettes are on an even footing.
Petrol prices: Some complicated changes to the fuel duty on petrol prices at the pump and North Sea duties but the long and short of it is that fuel duty will decrease by 1p per litre from budget Day and also the planned 5p per litre increase that would have taken effect in a couple of weeks will not happen and will be postponed until next year.
Pensions: a flat rate pension of £140 per week will be introduced for pensioners and retirement age will relate to life expectancy.
40,000 new apprenticeships are being introduced for unemployed.
No rise in air fuel duty this year but private jets will now be bought into the loop for air fuel duty.
Today (22 June 2010) George Osborne delivered his Emergency budget speech as part of the coalition government plan to get the UK economy back on track. The main idea of the budget was to reduce the huge debt that is owed by the UK by cutting public spending and increasing taxes. According to George Osborne the budget would balance this by the ratio of 77% in spending cuts to 23% in tax increases.
It was never going to be a pleasant budget as cuts really need to be made so the main points were as follows:
Growth will be slightly less than forecast by Labour with a figure of 1.2% for 2010/11 (reduced from 1.3%) and 2.3% for 2011/12 (down from 2.6%)
We will not be joining the Euro in this parliament and the Euro Preparation Unit has been scrapped.
The cost to the taxpayer of debt interest payments amounts to 1/4 trillion GBP a year. Debt interest payments can only be reduced once the debts are reduced and this will be achieved over the term of the parliament.
The payments to the civil list will remain frozen at 7.9m a year and will be audited by the National Audit Office.
In the public sector there will be reductions in public spending amounting to an average of 25% over 4 years. Some departments will need to be shielded from these cuts including Education and Defence.
The government will aim to put in incentives to get people back to work and less incentives not to work. This includes exemptions from employer NI in specific areas (outside London etc) and a change in tax credits.
The current tax credits are unsustainable and currently there are some families whose income is as much as £83,000 who are eligible for benefits. This must be stopped and a cap introduced.
Some grants will be abolished including the health in pregnancy grant, the surestart maternity grant, free swimming. Other benefits will be frozen including a 3 year freeze on child benefit. A medical test will be introduced for the disability living allowance as it is claimed by 3 times as many people as when it was first introduced.
Housing benefit needs to be reassessed as this costs as much as the Police and the Universities together and the costs have spiralled out of control. The top housing benefit payment pays out £104,000 a year to one family, this needs to be stopped. A cap will be introduced at £400 a week for a 4 bedroom house.
In April 2011 the employer NI threshold will rise so that it costs less to employ people.
Corporation tax will be reduced by 1% per year from 28% to 24% over the term of the parliament. The small company tax rate will be cut to 20%.
The banks will be charged a bank balance sheet levy in line with France and Germany to stop the banks from creating a similar financial meltdown as we have seen.
On 4 January 2011 VAT will increase from 17.5% to 20%.
As there were large increases in duties in the March budget there will be no increases in duty on alcohol, tobacco and fuel. The increase on cider that was planned will be revoked later this month.
Council Tax charges will be frozen for a year if the councils can keep their spending down.
Capital Gains Tax needs to be changed due to people exploiting the gap between CGT and Income Tax. CGT for higher rate tax payers will increase from 18% to 28% from midnight on Tuesday.
Income Tax – to try and lift people out of the income tax system the personal allowance will be raised by £1,000 to £7,475 in April 2011. It is intended to increase this to £10,000 over the course of the parliament. The higher rate threshold will be frozen however.
Pensioners receive a significant boost by changing the link in increases from RPI to earnings with a minimum increase of 2.5% each year. However, the pension age will be increased to 66.
No increases in tobacco, alcohol and fuel.
Tax free earnings threshold increases to £7,475 from April 2011
Freeze in Council Tax
Some reductions in benefits
Public Sector 2 year pay freeze.
Pension age increased to 66 but pensions likely to increase.