The Budget 2012 included a series of announcements that could affect your finances. Mike Scott our tax manager explains the highlights and how it will affect you and your money:
- The personal allowance increases 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 is to be frozen – perhaps the most controversial announcement made as dubbed the ‘granny tax’. 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 that affect all of us. At HSJ we act for many individuals helping them to make the most of their money and save as much as possible from their tax bill.
If you would like to meet with our personal tax team and review your finances then please call us on 0845 365 1000 or email us at firstname.lastname@example.org.