Despite the fears of further changes to pension tax reliefs and allowances, none were announced in the Chancellor’s speech today. He confirmed the plan to change the State Pension to a single tier above the means test, at a minimum of £140 per week. This will be for future pensioners.
The personal tax threshold will increase from £7,475 to £8,105 from April 2012; and to £9,205 from April 2013. The age allowance for people above age 65 will be phased out by freezing it until the normal personal allowance catches up with it.
The 50% top tax rate will drop to 45% from April 2013. More people will pay higher rate tax of 40%, as the threshold is reduced from £42,475 to £41,450 from April 2012.
The corporation tax rate for large companies will drop from 26% to 24% in April, and will be cut further to 22% in 2014, with a view to further cuts down to 20%, the rate currently paid by smaller companies with profits less than £300,000. The Chancellor wants to align the personal tax rate of 20% with the corporation and small business tax rates.
The controversial withdrawal of child benefit from higher rate taxpayers will be changed so that it is gradually withdrawn above £50,000, at a rate of 1% of the benefit for every £100 earned.
Stamp Duty Land Tax on residential property has been increased from 5% to 7% for properties selling for more than £2m; and if the property is held in a corporate structure the tax will be 15%, with immediate effect. There may also be capital gains tax payable on properties held in overseas companies.
UK inflation is expected to fall from 2.8% this year to 1.9% next year. The growth forecast for 2013 is 2% and 2.7% for 2014.
The government will consult on issuing gilts with a term of more than 50 years, possibly allowing them to borrow for the very long term at very favourable rates.
Risk warnings
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