The 2012 Budget
Was it really just a millionaire’s budget, let’s find out….
The Budget to anyone involved in finance is like an Olympic sport is to athletes. There’s the build-up, the excitement, the anticipation, the one-on-one, the team spirit, the-them-and-us, the brothers-in-arms and, of course, the event itself. It starts around the end of the Pre-Budget Report. We spend the winter in training, building finger muscles for calculator speed, bench pressing the FT so we can stand and shout at the radio and sit back down with increasing agility. It’s not for the weak and most don’t go the distance. But what did happen this year? Ignoring the usual rates, bands and thresholds ups and downs; this is the budget.
Stamp Duty Land Tax
The 1% holiday is over for first time buyers and, in probably its most public step to date on tax avoidance, the government moved to stop offshore companies being used to buy residential properties to avoid Stamp Duty Land Tax. For now, at least, they have decided not to include commercial properties which I think is the right move. The increase to 7% on expensive residential properties is fair but surely the 15% levy on companies used to purchase expensive residential properties isn’t; level playing fields and all that. This is clearly a sign that the government is warming its lance on anti-avoidance.
The threshold rises to £50k for when benefit starts to be removed, households where one individual earns more than £60k will receive no benefit at all and there will be a gradual removal between the two. Why two £40k earners in one house can receive full benefit is beyond me but I don’t think we’ve heard the last of the changes to the scheme. There’s good news for accountants and civil servants though: more people will need to do tax returns. Well done George, but weren’t you supposed
to be simplifying the scheme?
“Don’t work with animals and children”… and don’t mess with pensioners. You do, however, introduce ‘level playing fields’
(see above) where you can, and, in George’s defense, I think everyone should have the same individual personal allowance. What he didn’t do was increase the state pension to compensate and adjust for inflation (oh, the impetuousness of youth). Was this a move to take more from the retired and a genuine policy aimed at the re-circulation of wealth? I’m not convinced.
The 45p Club
We officially have a new tax rate: ‘The 45p Club’. Millionaires only need apply, your pockets will be checked at the door, not for weapons, but to make sure you have enough 5p’s to be able to afford the prices. Jokes aside, I’m actually in favour of any move not to disincentivise high-rate tax payers. The debate over whether they contribute enough already will no doubt rage on.
So where are we in all this? Short answer: nowhere we weren’t before. Skipping over the corporation tax reduction, the tax relief cap, the improvements to the VCTs and the EI Schemes, changes to the statutory residence test and non-domicile rules and the broad attack on anti-avoidance, in my view the government missed a real opportunity to put some real hope into the homes of ordinary people who ultimately make up the largest influence on economic prosperity. On the upside though, more tax returns for accountants is always a good thing, he says, ducking for cover…