Budget Report 2012
The Chancellor’s Budget Statement on Wednesday 21 March delivered no real surprises although it signalled a call to action for a proportion of the population able to take advantage of additional rate tax reliefs on pension contributions.
The key elements of the statement included no changes to pensions allowances, tax free cash or tax relief on pensions. However the reduction of additional rate tax from 50% to 45% gives those pension savers, with the relevant income, the opportunity to still benefit from higher reliefs on contributions, including Carry Forward, until it comes into effect on 6 April 2013.
An increase in the personal allowance will benefit many of the population but rules will be implemented for higher rate taxpayers to restrict their benefit from this.
The introduction of a new band of stamp duty and targeted changes to stamp duty for properties held in corporate structures signalled the strengthened resolve of the Government and HMRC to tax the very wealthy and tackle tax avoidance by using ‘aggressive tax avoidance schemes’.
The Chancellor stated his view that “aggressive tax avoidance is morally repugnant” and signposted a consultation on General Anti Abuse Rules. Tax avoidance has been described as the use of tax law in a way not envisaged by Parliament and, while a useful starting point, will inevitably throw up “grey areas”. The distinction between avoidance and mitigation will become blurred, however it will always be preferable and appropriate to err on the side of caution and apply a conservative approach.
The Chancellor also signposted several other measures which included; the introduction of a cap on currently unlimited income tax reliefs, confirmation that the current regime for venture capital trusts and enterprise investment schemes remains and the abolition of the age related allowance for new pensioners from 2013 along with the freezing of the current allowance.
For further information please read our 2012 Budget Report (PDF) or speak with your
St. James's Place Partner.
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