Budget 2012 highlights

Budget 2012 highlights

Here are the highlights of the 2012 Budget including changes to taxes, benefits and other measures announced by the Chancellor of the Exchequer.

Written by Abigail Montrose on 22 March 2012

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Here are the highlights of the Budget. For details of any tax and benefit changes already anounced by the Chancellor in his Autumn statement, see our guide.

Your MoneyVista plan will automatically take into account any tax changes announced when projecting your financial future. However, you may want to visit the Budget section of your plan to review your income and spending.

Income Tax and Personal Allowances

  • Additional-rate tax for people with taxable income over £150,000 will be cut from 50% to 45% from 6 April 2013.
  • The personal allowance for people under 65 rises to £8,105 on 6 April 2012 and to £9,205 on 6 April 2013. This is expected to affect 24 million people.
  • The age-related personal allowance for those aged 65-plus will be frozen for existing claimants and no longer available to new pensioners from 6 April 2013. Currently, people aged 65-plus have a higher personal allowance than people under 65. The personal allowance for people aged 65 to 74 is £9,940 for 2011-12 (rising to £10,500 in 2012-13) and for people aged 75 and over it is £10,090 (rising to £10,660 in 2012-13).
  • Personal tax statements showing how much tax you pay, your tax rate and how your tax is spent are to be issued from 2014.

Child Benefit

  • From 7 January 2013, families with one parent earning £50,000 or more will start to lose some of their Child Benefit and all of it once they earn £60,000. Child Benefit will still be paid, but the person earning £50,000 or more will have to pay extra tax. The extra tax is equivalent to 1% of any Child Benefit received for every £100 earned over £50,000. So if the person paying the extra tax earns £60,000 or more, the amount of extra tax they pay will effectively cancel out any Child Benefit received.

Stamp Duty

  • Stamp Duty on house purchases of £2 million or more to rise from 5% to 7% from 22 March 2012.
  • People buying residential property for £2 million plus through a company, collective investment scheme or partnership will have to pay 15% Stamp Duty.

Cigarettes, fuel and alcohol

  • Tax on tobacco to rise by 5% from 22 March 2012. Typically, this will increase the price of a packet of 20 cigarettes by 37p.
  • No new fuel duty measures announced so the 3.02p per litre rise in unleaded petrol from 1 August 2012 will go ahead.
  • No new alcohol taxes announced so the 2% plus inflation rise in the cost of a pint of beer will go ahead increasing the price by around 5p a pint.

VAT on food and other goods

  • Hot food (other than freshly-baked bread) from shops will no longer be exempt from VAT like other take-away food.
  • Sports drinks, self-storage, static caravans and hairdressers' chairs will also no longer be exempt from VAT.

Minimum wage

  • The national minimum wage is to rise from £6.08 to £6.19 an hour from October 2012.
  • Youth rates remain frozen £3.68 for 16-17 year olds and ££4.98 for 18-20 year olds.
  • The apprenticeship rate is to rise from £2.60 to £2.65 an hour.

Forces personnel

  • Military personnel serving overseas to receive 100% Council Tax relief.

Business taxes and other help for businesses

  • Corporation Tax to be cut by 2% to 24% on 1 April 2012 and by 1% a year for the following two years. The smaller companies' rate remains at 20%
  • Relaxation of the Sunday trading laws from 22 July to 9 September 2012 during the Olympics and Paralympics.

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