The Government is committed to creating a sustainable tax system that is fair and supports growth.
It will bring forward plans to reward work and support families; reduce headline tax rates to increase the competitiveness of the UK tax system; restrict tax reliefs and close loopholes to make the headline tax system fairer; and introduce measures to create a simpler and more sustainable tax system overall.
Budget 2012 announces wide-reaching reforms to support this goal, including:
Increasing an individual’s income tax personal allowance by a further £1,100 in April 2013, taking it to £9,205 in total;
Child Benefit will be withdrawn through an income tax charge from households where someone has an income over £50,000 a year. The withdrawal will be gradual for households where someone has an income between £50,000 and £60,000;
Reducing the top rate of income tax from 50 per cent to 45 per cent in April 2013;
Reducing the main rate of corporation tax by an additional one per cent, so that the rate will reduce from 26 per cent to 24 per cent in April 2012, to 23 per cent in April 2013 and will come down to 22 per cent by April 2014.
Introducing a cap on all unlimited income tax reliefs by setting a cap of £50,000 or 25 per cent of income, whichever is higher
Introducing a new Stamp Duty rate of 7 per cent for residential properties over £2 million, from 22 March 2012;
Accepting the recommendation by the independent Aaronson Report that a General Anti-Abuse Rule (GAAR), targeted at tackling artificial and abusive tax avoidance schemes, would improve the UK’s ability to tackle tax avoidance while maintaining UK’s attractiveness as a location for business investment
Moving towards a simpler, single personal allowance regardless of age by freezing existing Age Related Allowances (ARAs) from 6 April 2013 at 2012-13 levels until they align with personal allowance. From April 2013, ARAs will no longer be available, except to those born on or before 5 April 1948. The higher ARA will only be available to those born before 6 April 1938.