The following article sets out a few of the personal tax changes that have attracted press commentary since the announcements were made 21 March 2012.
- Top rate of income tax to fall from April 2013 – Following much speculation the Chancellor announced that the 50% top rate of income tax will be reduced to 45% from 6 April 2013. This provides tax payers with income estimated to be over £150,000 in the tax year 2012-13 an opportunity to defer income to 2013-14 and thus reduce any higher rate liability.
- Personal tax allowances for under 65s – From 6 April 2012 the basic personal tax allowance is increasing to £8,105 for those with income under £100,000. From 6 April 2013 this allowance is due to increase by a further £1,100 to £9,205. There will be no benefit to 40% rate taxpayers as income tax thresholds will be adjusted reducing the amount taxed at basic rate from £34,370 in 2012-13 to £32,245 in 2013-14.
- Personal tax allowances for over 65s – The higher personal allowances for the over 65s are to be frozen from April 2013 until they match the under 65s allowance. Effectively those born after 5 April 1948 will not be able to claim the higher allowance for the over 65s for 2012-13, and those born after 5 April 1938 will not qualify for the over 75s higher age related allowance from 2012-13.
- Stamp Duty changes – A punitive rate of 15% SDLT now applies to all property purchases made by ‘non-natural’ persons such as a company. Interestingly this will only affect property purchases in excess of £2m. Properties worth less than £2m are not affected.
- Capping of tax relief – From April 2013 the Chancellor intends to introduce a restriction to the amount of previously uncapped tax reliefs an individual can claim. The cap will be set at the higher of £50,000 or 25% of income.
Please give us a call if you have any queries.
Sue Stephens, Tax Manager