Budget 2012 – Key Points

Income tax

  • From April 2013, the 50p top rate of tax will be cut to 45p.
  • Personal income tax allowance raised to £9,205 from April 2013, making 24 million people £220 a year better off.
  • New general anti-tax avoidance rule to be introduced.
  • Age-related allowances for pensioners to be simplified over time, starting in April 2013, creating a single personal allowance for all but ensuring no pensioner loses in cash terms.

Help for business

  • Corporation tax (main rate) cut to 24% from next month. By 2014 it will fall to 22%.
  • Enhanced capital allowances for businesses setting up in new Scottish enterprise zones in Dundee, Irvine and Nigg. A Welsh enterprise zone to be created in Deeside.
  • Simplified tax system for small firms with a turnover of up to £77,000.
  • Government support for £150m of tax increment financing to help councils promote development and an extra £270m for the Growing Places fund.
  • Tax relief for the video games, animation and high-end television production sectors.
  • Government considering enterprise loans for young people to start their own business.

Housing

  • From midnight, new stamp duty level of 7% for homes worth more than £2m. Any such homes bought through companies will pay 15%.
  • Extra funding to help construction firms building new homes.

Other taxes

  • Bank levy to be increased to 0.105% from January 2013 “to ensure that corporation tax cuts do not benefit the banks”. The levy will raise £2.5bn a year.
  • New cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year, but no significant change to pensions relief.

Pensions

  • New single-tier state pension for future pensioners to be set at about £140 and based on contributions.
  • Automatic review of state pension age to ensure it keeps pace with increasing lifespans.

Child benefit

  • Will be phased out when someone in a houshold has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000. Only those earning more than £60,000 will lose the entirety of the benefit.

Fuel, Cigarette and Alcohol Duties

  • Duty on all tobacco products to rise by 5% above inflation from 18:00 today – the equivalent of 37p on a packet of cigarettes.
  • No change to alcohol duty.
  • New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings.
  • No change to existing plans on fuel duty. Vehicle excise duty to rise by inflation, but frozen for road hauliers

UK Economy

  • Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% – from 0.7%.
  • Forecast for 2013 is 2%, for 2014 is 2.7%, and in the two years after that 3%.
  • Eurozone growth forecast for this year revised down by 0.8% to -0.3%.
  • UK inflation forecast to fall from 2.8% this year to 1.9% next year.

Borrowing

  • Borrowing this year to be £126bn – £1bn less than forecast in the autumn. Forecast to fall to £21bn by 2016-17.