Budget 2012: your money highlights

Budget 2012 included a series of announcements that could affect your finances. Highlights included:

  • The personal allowance will increase to £9,205 in April 2013, putting the Government on track for its £10,000 target.
  • The 50% additional tax rate will reduce to 45% from 2013, after the new rate caused ‘massive distortions’ and raised just one third of what it was forecast to.
  • Age related personal allowance to be frozen – perhaps the most controversial announcement made. From 2013/14 the availability of the age related personal allowance will be restricted. The allowance of £10,500 for 2012/13, available for those aged 65 to 74 will be restricted to individuals born after 5 April 1938 but before 6 April 1948. The age related personal allowance of £10,660 for 2012/13, available to people aged 75 and over will be restricted to those born before 6 April 1938. The allowance of £10,660 will not be increased in 2013/14.
  • Child benefits – a new income tax charge is being introduced from 7 January 2013 on taxpayers who are both in receipt of child benefit and whose annual income exceeds £50,000. This charge also applies if it is the partner of the taxpayer earning £50,000 in a tax year who is in receipt of the child benefit. In a case where both partners earn over £50,000 in a tax year, the income tax charge will only apply to the partner with the higher income. For taxpayers with income in a tax year of above £60,000, the tax charge will equate to the amount of the child benefit. For those taxpayers with an income of between £50,000 and £60,000, the income tax charge will be 1% of the amount of child benefit for every £100 of income above £50,000.

These are just some of the announcements made. Please contact us if you would like more information or think that we can help you to prepare for these changes.