The Chancellor of the Exchequer George Osborne stood in the Commons on Wednesday to announce the details of the 2012 Budget, and as always there was some good news and some bad. Many of the announcements came as no surprise to people as some of the details had been published before Wednesday’s budget but there has been a compromise on child benefit.
George Osborne announced that child benefit would only be removed when a person in a household earns more than £50,000 and the withdrawal of child benefit is to be gradual with 1% of child benefit for every £100 earned, which means that people earning under £60,000 will not lose their benefit.
One of the major announcements confirmed today were the changes to the personal allowance. It was announced that from 2013, the personal tax allowance will increase to £9,205, which will take millions of people out of paying taxes, the Chancellor says; the personal allowance is likely to rise to £10,000 in 2014/15.
The 2012 budget is being touted as one which promotes growth and which will allow businesses to grow and make work pay. The introduction of the 5o% top rate of tax was not a popular one and many argued that it stifled growth. The move didn’t raise the money that was predicted and it was announced that from next year the top rate of tax will be 45%. Perhaps to offer further proof of the Government’s backing for business and growth, the Film Tax Credit scheme is to be extended to video game, animation and high-end TV production.
During the Chancellor’s address it was also announced that a Stamp Duty Land Tax rate of 7% will be introduced from midnight on Wednesday and that income tax reliefs will be capped; measures have also been taken to stop people avoiding stamp duty and to stop people from evading tax through tax avoidance schemes.
There was at least some good news for motorists with the news that Vehicle Excise Duty would grow by inflation only; VED for road hauliers has been frozen. However, this doesn’t help motorists struggling to keep up with the spiralling costs of fuel at the petrol pumps, and Fuel Duty is still set to rise in August.
The news for smokers wasn’t so good with the announcement that the price of a packet of cigarettes would rise by 37p from 6.00pm on Wednesday; a rise in alcohol duty had previously been announced.
It was also announced that taxation for pensioners would be “simplified”. However, in a move which has received criticism, the pensioners allowance has been frozen. It was also stated that a £140.00 flat rate pension is to be introduced for future pensioners.
In another change, which was announced on Tuesday, taxpayers will receive a statement from 2014 showing them how their money has been used.
For better or for worse, the spending cuts are also taking effect as George Osborne also announced that the deficit, which was at 11% when the coalition came to Government, will be reduced to 7.6% by 2013.