Posts Tagged ‘Budget’

Your money

Posted on: June 29th, 2012 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Chancellor George Osborne made a series of Budget U-turns regarding tax and VAT, following concerns raised by charities, businesses and the public. So what changes have been made?

Charitable donations

Tax avoidance featured heavily in March’s Budget, but proposals to introduce a cap on income tax relief for charitable donations met strong opposition from charities, fearing it would damage philanthropic giving. Plans to limit the amount a person can donate tax-free to £50,000 or 25 per cent of their income (whichever was higher) have now been dropped.

Hot food

The Government’s ‘pasty tax’ had originally planned to charge VAT at 20 per cent on all hot foods. However, the change means that foods such as pasties and baked goods which are sold cooling-down (as opposed to being kept in hot cabinets) will now not be charged.

Static caravans

Plans to charge 20 per cent VAT on static caravans, bringing them in line with mobile ones, have also been dropped. The implementation of a new five per cent VAT charge has also been delayed from October to April next year.

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Finance Bill 2012 published

Posted on: March 30th, 2012 by LeightonReed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

The Government has published the Finance Bill 2012, in which tax measures announced in Budget 2011 and 2012 come into force.

This year’s Bill includes ongoing measures to maintain the Government’s deficit reduction strategy, whilst supporting growth and employment. It also hopes to undertake significant tax reforms.

Key legislation in the Bill includes:

  • The basic rate band for income tax will decrease to £34,370 for the tax year £2012/13.
  • The tax-free personal allowance for those aged under 65 will be raised to £8,105 for the tax year 2012/13.
  • The top rate of income tax will reduce to 45 per cent from 6 April 2013.
    The corporation tax rate will reduce to £24 per cent from 1 April this year and to 23 per cent on 1 April 2013.
  • A commitment to tackle over £1 billion of tax avoidance and evasion, including tightening rules around stamp duty and inheritance tax evasion through off shore trusts.
  • An ongoing strategy to simplify the tax system including the elderly and small businesses.
  • The Government has committed to confirm the majority of Finance Bill measures at least three months prior to introduction, with 400 pages of legislation published in the draft Finance Bill in December 2011. It also aimed to open up the Bill to thorough consultation and scrutiny.

The exchequer secretary to the Treasury, David Gauke, said: “This year’s Finance Bill shows just how committed the coalition Government is to rewarding work, simplifying the tax system and tacking the nation’s debts.

“The measures in this Bill will create a tax system which supports a strong economy and promotes a fair society. In other words, a tax system that works for Britain”.

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Budget 2012 – commentary

Posted on: March 22nd, 2012 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

As always the Budget produces a mixed bag of changes, some win and some lose out.  We can focus however on three groups of people; pensioners, those on higher incomes and businesses.

Much has already been said about the “granny tax” but to put this in perspective, it will affect pensioners who are not yet aged 65, who have annual income of more than about £9,200 but less than about £29,000.

Turning to those who have larger incomes, the cut in the top rate of tax to 45% is a good thing overall.  Many business owners have tried to avoid the 50% tax hit by deferring income since the rate came in and by accelerated income before it came in.

Entrepreneur’s and owners often say to me that the 50% tax rate stifles their enthusiasm to invest to make more profit because a bigger proportion of that profit is paid to the Government when you take National Insurance into account.  We think the cut in the rate will reduce the need for tax avoidance plans, encourage more entrepreneurship and increase the Government’s tax take overall.

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Budget Report March 2012

Posted on: March 22nd, 2012 by LeightonReed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Download our Budget Report 2012

George Osborne continued his fiscal campaigning by attempting to juggle tax take, Government borrowing and economic growth. Only time will tell how many balls he will continue to keep in the air and for how long.

There are no dramatic tax changes announced in his Budget Statement. Many of the key items such as reduction of the 50% income tax rate, increases in stamp duty for higher value homes and increases in the personal income tax allowances, were “leaked” in advance. However, there were a few surprises.

Details of the tax changes announced are set out below.

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Pre-Budget planning

Posted on: February 23rd, 2012 by LeightonReed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

The 2012 Budget is about a month away now and you may have been reading in the press the possible changes to tax to be announced by Mr Osborne.

Whilst, of course, we can never really know what he will precisely say the following topics have been widely discussed by the tax community.

On one hand HMRC collected more tax in January 2012 than in 2011 suggesting tax cuts but on the other we know that there is still a significant amount of tax avoidance going on which is reducing tax receipts.

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End of year tax planning pointers

Posted on: December 7th, 2011 by LeightonReed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Whether you are a business owner or a full time stay-at-home parent, there are measures you can take now to minimise your tax liability this tax year.

Income tax saving for couples

Any personal allowance (£7,475 for 2011/12) that is not used at the end of a tax year cannot be carried forward. However, couples can make use of each other’s unused allowances through methods such as transferring ownership of income generating assets (such as savings and investments). Couples can also jointly own income generating assets, where the income will automatically be split 50-50, unless otherwise specified, but the income paid must correspond to the proportion owned (this is only possible if you are married or civil partners).

Extracting profits from a company

Salary

National insurance contributions are expensive, but salary can be deducted from taxable profits in the company, so if profits are taxed at the marginal small companies rate (currently 27.5 per cent), there is very little difference between extracting profits by way of salary or dividend for higher rate taxpayers.

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