2012 Budget highlights

Posted: 22/03/2012

SDLT

SDLT rate of 7% on residential property costing more than £2m. The measure will have effect for transactions where the effective date is on or after 22 March 2012. Transitional provisions will ensure that, broadly speaking, the old rates will continue to apply for contracts entered into before 22 March 2012 but completed on or after that date. The current rate of 5% will continue to apply to transactions between £1m and £2m.
New SDLT rate of 15% on residential property costing more than £2m bought by non-natural persons, such as companies effective midnight 21 March 2012.
Consultation to be issued on the introduction of an annual charge on residential properties valued at over £2 million owned by non natural persons with the intention of legislating in Finance Bill 2013 for commencement in April 2013.
The Government will consult on the SDLT sub-sales rules.

Companies

Corporation tax rate reduced to 24% from April 2012 (from the current rate of 26%) and further cuts to be made in the coming years to achieve a rate of 22% by 2014.
Consultation on 'cash basis' taxation for small unincorporated businesses with a view to implementation in Finance Bill 2013.

Planning

The final National Planning Policy Framework to be published Tuesday 27th March 2012 and is to include a presumption in favour of sustainable development.

VAT

From 1 October 2012, VAT will be extended to reduce anomalies, including removing the zero rate for alterations to protected buildings(mostly listed residential dwellings but also listed buildings used for charitable and other residential purposes). A consultation on the changes was published alongside the Budget.

Capital gains

Plans to extend the capital gains tax regime to gains on the disposal of UK residential property by non-resident, non-natural persons, such as companies. A consultation on the details of the measure to be published and implementation expected in April 2013.

Anti avoidance

General Anti-Abuse Rule aimed at 'artificial and abusive' tax avoidance schemes to be consulted on in summer 2012 and introduced in Finance Bill 2013 (the rule will also apply to SDLT).

CRC

Consultation on simplifying the Carbon Reduction Commitment energy efficiency scheme to reduce administrative burdens on business. Should 'very significant' administrative savings not be deliverable, the Government will look to replace CRC with an alternative environmental tax.

Personal tax

The top income tax rate to be reduced to 45% (from 50%) from April 2013.
Personal tax allowance to be increased to £9205 from April 2013 (an increase of £1100).
Withdrawal of Child Benefit for higher earners will be gradual. For people with an income between £50,000 and £60,000 the benefit will be reduced gradually; only those with an income in excess of £60,000 a year will completely loose the benefit.
There will be an automatic review of state pension age to ensure that it keeps up with an aging population.
New limit on all uncapped income tax reliefs to be introduced. For anyone seeking to claim more than £50,000 of relief, a cap will be set at 25 per cent of income (or £50,000, whichever is greater).

Other

An additional £150m to be made available to the Get Britain Building fund.
The Growing Places Fund to be increased by £270 million (including £70 million for the Greater London Authority).
Increase in the Bank Levy to 0.105 per cent from 1 January 2013.
Government to continue exploring new ownership and financing models for the national roads network (including investment by pension funds) and support the establishment of a new Pension Infrastructure Platform owned and run by UK pension funds.
100 per cent capital allowances on plant and machinery investment made in designated areas of the London Royal Docks Enterprise Zone, three Scottish Enterprise Zones in Irvine, Nigg and Dundee, and Deeside in North Wales. This is in addition to enhanced capital allowances already announced in English Enterprise Zones in 2011/2012. A full list of current zones and maps is to be published on the Treasury website and allowances will be available from 1 April 2012.
Sunday trading laws to be relaxed during the Olympics (eight Sunday's starting on the 22nd July 2012).
Tax on tobacco up by 5% above inflation and changes to gambling duties to be introduced.
Road tax to increase by RPI and rates for heavy goods vehicles frozen.
Below inflation increases to the National Minimum Wage (£6.19 per hour with effect from October 2012).

What was not there?

No business rates announcements.
No announcements on REITs, although the Government is to consult in 2012 on the REITs regime, and specifically on the role REITs can play in supporting the social housing sector and whether to change the treatment of income received by a REIT when it invests in another REIT.
No change to plans already set out in relation to tax on alcohol and fuel duty.

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