Budget 2012

[Sheilbh]

The Tories apparently think George Osborne's a great political strategist.  I don't understand how he got that reputation, and if the 2010 election didn't kill it off, surely this budget should.  It seems like he's gone out of his way to target people who should be voting Tory and raised their taxes, to little effect.  I don't know what they're thinking with this child benefit change.  At the same time he's been preaching tax simplicity for the past few years and has now introduced a new raft of credits and complex clawbacks

Budget 2012: George Osborne cuts 50p top tax rate

George Osborne has announced cuts to the top rate of income tax - and an increase in the amount of money people can earn before they start paying tax.

But 4.4m pensioners will be worse off next year as a result of age-related tax allowances being frozen and axed.

The chancellor said the 50p rate was uncompetitive, raised "next to nothing" and would fall to 45p next year. Other measures would raise more, he said.

Labour's Ed Miliband said millionaires would get a "massive income tax cut".

BBC political editor Nick Robinson said the chancellor had taken a huge political gamble, that by arguing that overall the rich would pay more, the public would overlook what amounted to a significant tax cut for tens of thousands of wealthy people.

Delivering his third Budget, Mr Osborne also said tobacco tax would rise by 5% above inflation, adding 37p on 20 cigarettes. The scheduled 3p rise in fuel duty in August will go ahead.

His plans would reward work, he said: "This Budget supports working families and helps those looking for work. It unashamedly backs business. And it is on the side of aspiration: those who want to do better for themselves and for their families."

He defended the politically risky decision to cut the top rate of tax by saying five times as much would be raised from the wealthiest by other tax and anti-avoidance measures being brought in.

A report into the highest rate, introduced by Labour in 2010, had found it had caused "massive distortions" - and had raised just a third of the £3bn initially predicted, Mr Osborne said.

"No chancellor can justify a tax rate that damages our economy and raises next to nothing."

Stamp duty changes
The threshold at which income tax is paid had been due to rise to £8,105 next month and will now increase to £9,205 in 2013.

Mr Osborne said it would benefit "every working person on low or middle incomes" and amounted to an extra £170 a year each after inflation.

BUDGET AT A GLANCE
Increase in personal tax allowances - the amount of income that is tax free - to £9,205 in April 2013
Top rate of tax reduced from 50p to 45p in April 2013
Measures to clamp down on tax avoidance
Rise in stamp duty to 7% for sales of houses worth £2m
Corporation tax to fall to 24% next month - 22% by 2014

Age-related tax allowances are currently more generous for the over-65s - at £10,500 up to age 74 and £10,660 after that.

But they will be frozen, and stopped for anyone turning 65 after 5 April 2013, meaning 4.41m people will be worse off, by an average of £83, in real terms in 2013-14.

And HM Revenue and Customs figures show that 300,000 people will be drawn into paying the 40% higher rate tax from 2013/14 because of a reduction in the threshold.

A new 7% rate of stamp duty would be charged on properties worth more than £2m - and anyone trying to buy a £2m home through an offshore company would face a punitive 15% stamp duty rate.

Child benefit had been due to be removed from all families with at least one parent paying the higher, 40% rate, of income tax - about £43,000 - from January 2013.

But Mr Osborne said he wanted to avoid a "cliff edge" effect - so it would now only be withdrawn when someone in a household earned more than £50,000, at a rate of 1% of the benefit for every £100 up until £60,000, when it would be cut entirely.

It meant 750,000 more households would not now lose all their child benefit.

Corporation tax
He said corporation tax would be cut more than expected from next month, to 24% rather than 25% as planned, falling to 22% by 2014, something he said would be "an advertisement for investment and jobs in Britain".

Mr Osborne also announced there would be limits on uncapped tax reliefs and said he would get rid of age-related allowances, introducing a new single personal allowance for all.

In his last big financial update - the Autumn Statement in November - the chancellor lowered growth forecasts for the UK economy and extended the period of spending cuts by a year to 2016-17.

But he was able to nudge up the growth forecast for 2012 - which had been revised down from 2.5% to 0.7% - to 0.8% and said he was "on course" to eliminate the structural deficit by 2016/7.

He also said the Independent Office for Budget Responsibility expected the UK would avoid a "technical recession" - but that the eurozone crisis and a spike in oil prices continued to pose risks.

In other announcements, he said the state pension age would be automatically reviewed, to ensure it kept pace with changing life expectancy.

More help for the armed forces was announced - with £100m improvements to accommodation.

And he said the UK must "confront" the lack of airport capacity in the south east - and more would be announced this summer. The government scrapped plans for a third runway at Heathrow.

But Labour Leader Ed Miliband labelled it a "millionaire's budget".

"Tax credits cut, child benefit taken away, fuel duty rising - and what has he chosen to make his priorities?

"For Britain's millionaires, a massive income tax cut each and every year."

http://www.bbc.co.uk/news/uk-politics-17449501

I like the idea of personal tax statements though.  It's interesting because they were advocated by the left in the US and they're being advocated by the right over here.  Both sides think that if people see how their tax is being spent they'll support their point of view.  It should be interesting to see who's correct.

[Richard Hakluyt]

The child benefit thing is Brownian in its pointless devilish complexity, rather disappointed in that.

I'm pleased they are continuing to raise the income tax allowance, of course they continue to lower the rate at which the higher rate kicks in so that the better-off don't benefit from that change. At some point that will have to stop as the 40% rate will become perceived as a main rate of tax, these new changes mean that 15% of the workforce pay it I think.

All-in-all a thoroughly boring budget.

[Brazen]

It was rather enjoyably like a 1950s news room in here as we all listened to it live and digested its relevance to about 20 different websites. Fortunately, other than the redistribution of some of the Afghanistan savings to improve the lot of troops and their families there was little news outside the SDSR defence-wise, but we cobbled together some nice little infographics.

Yay for the income tax allowance, the £25 or so extra a month when it's full implemented will counter a couple of increases to my bills of late.

Rather disappointed in the fuel tax going up, another year to consider selling my car. There is nothing "additional" on booze, but there was already a long-term plan for increases in place. More pubs will be shutting. Several have already withdrawn the best-selling lager Fosters because there's no longer any profit margin on it.

RH, you may find it harder to cadge fags off people now they've gone up 37p a pack

[Sheilbh]

It was rather enjoyably like a 1950s news room in here as we all listened to it live

Brazen?

[Richard Hakluyt]

@Brazen - the golden days of cadging are over since Ank went back to the States 

One of my bothers-in-law still smokes on occasion and I sponged 5 off him a couple of months back. I think thats it for the past year 

[Gups]

I don't necessarily disagree with the reduction in the top rate of tax but I think its one of the stupidist political decisions this Govrnment's yet made. Would be very surprised if it hadn't been trailed for a week.

Thank god I've switched to electronic fags, ciggies are now over 40p a pop

[Josquius]

cutting taxes for the rich and raising them for the poor....
so cliche.
its like theyre not even pretending to be nice anymore