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Budget 2012 - Key Points At A Glance

Published: 21st March 2012 14:25

Chancellor George Osborne has delivered his budget for the coming year,  and here we round up the key points:

 13.30: It's over. He's sat down. Now for the Devil, details etc. 

13.28: Income tax personal allowance to rise to £9,205 from next year. Gain of £220 per year for 24million workers.

13.25: Child benefit cut softened so only those families with no parent earning more than £50,000 will lose.  

13.20: 50p tax rate - HMRC reports the rate has raised £1billion. Confusingly, OBR adds that scrapping the rate will cost Treasury £100m. Rate for those on £150,000 will drop to 45 per cent from April next year.

13.20: Tax avoidance cap so anyone claiming £50,000 of relief will have relief capped at 25 per cent of earnings.

13.18: Stamp duty on all £2million homes raised to 7 per cent from 5 per cent.

13.17: Stamp duty on £2million-plus homes bought into a company (a well known tax dodge) will now attract 15 per cent.

13.15: General anti-avoidance tax rule will be legislated for in next year's finance bill.

13.15: No freeze in fuel duty rise.

13.12: Duty of tobacco to rise by 5 per cent above inflation from tonight - 37p on a pack of 20 fags. That raises duty faster than previous 2 per cent-above-inflation plans.

13.10: Cuts to corporation tax accelerated - down to 24 per cent from April, 1 per cent less than planned. But not for banks, which will see the bank levy rise to make up for the lower tax take from Corporation tax.

13.08: Taxpayers to be sent annual statements to let them know 'what they're paying and what they're paying for'.

13.05: Plans published today to remove VAT loopholes and anomalies, but will keep exemptions for food, children's clothes, books and newspapers. 

13.04: Independent review on local pay rates for public sector, with some departments given the option to move to local pay for civil servants whose freeze ends this year. 

13.00: Limited relaxation of Sunday trading laws - for eight weeks around Olympics, starting on July 22. 

12.55: The Downton Tax break - tax breaks on production enjoyed by the film industry will be extended to computer games and TV drama. 

12.45: The Debt Management Office will look into issuing UK gilts with maturity dates longer than 50 years - the current longest duration.

12.43: Mechanism to link rises in the state pension age with life expectancy to be announced in the summer.

12.40: Borrowing this year will by £126billion - £1billion ahead of target.  Inflation to fall from 2.8 per cent this year to 1.9 per cent in 2013 and 2 per cent by the end of the forecast period. The state's deficit is forecast to reach 7.6 per cent next year, with the share of GDP taken by the state down from almost 48 per cent in 2010 to 43 per cent in 2013. 

12.37: OBR forecasts unemployment to peak this year at 8.7 per cent before falling each year to 6.3 per cent by the end of the period. 

12.35: Office for Budget Responsibility (OBR) has upped its forecast for UK growth in 2012 by 0.1 to 0.8 per cent. Growth next year is forecast at 2 per cent, 2.7 per cent in 2014 and 3 per cent in 2015 and 2016.

12.30: The chancellor is on his feet. 

10.45 preview: Treasury leaks in recent days have ensured we already have good idea of the measures we can expect today, but don't be surprised to see George Osborne pull a rabbit or two from his hat.

The truth is the Government has little scope for giveaways, despite deficit reduction proceeding ahead of schedule this year. The Chancellor has staked his reputation on the UK maintaining its AAA credit rating and is determined not to announce unfunded tax cuts. Any tax breaks are likely to be balanced with further cuts in spending.

Sure to grab most attention will be changes to income tax. At the top end, a cut in the 50p tax rate for those earning above £150,000 is expected. It's politically explosive and the Chancellor will be keen to stress other measures that hit the rich.

A cut in the rate to 45p is the consensus expectation but stranger things have happened than the Chancellor keeping the rate where it is. It would bring howls from business but would also deny his political opponents a potent weapon.

At the bottom end of the earnings scale, an acceleration in the rise in the income tax threshold seems nailed on. The Chancellor is expected to increase the tax threshold to £9,200 by April 2013.

Eyes will be out for any freeze in the uprating of the thresholds on the  20 per cent, or more likely, 40 per cent bands. Freezing the thresholds - instead of uprating them in line with inflation - will drag more workers into higher rates of tax.

Taking the sting out of any tax cut for the highest earners will be a crackdown on tax avoidance by high earners and an increase in the rates of stamp duty land tax on high-value properties.

A new ceiling on the total high earners can offset against tax through allowances and loopholes is expected to be presented as a form of ‘tycoon tax'.

Wealthy homeowners face a hike in stamp duty from 5 per cent to 7 per cent for properties sold for more than £2million, plus a ban on a loophole that allows them to put properties in the name of offshore companies and dodge the tax altogether.

Child benefit will make headlines, with the Chancellor under pressure to soften the blow for families where one parent earns above £42,475. These families lose their £1,750 a year benefit while households with a combined income of up to £84,950, where neither earns above £42,475,   can keep theirs. An increase in the child benefit threshold to £50,000 has been reported.

Elsewhere, another freeze in fuel duty would not be a great surprise but calls for a reduction in VAT seem likely to fall on deaf ears. Cuts to corporation tax may be accelerated.



 

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