Budget 2012: An overview
There has been a lot of comment and headlines on the recent 2012 budget, with its usual mixture of winners and losers – from pasty eaters (cold is 'tax' good, above ambient temparature is not so 'tax' good, caviar is VAT free!). One thing that always perplexes me is peoples perception of what constitutes a tax and who actually pays it. As I have previously commented, if it looks, feels like & takes money like a tax it is a tax – this therefore includes income tax, VAT, national insurance, fuel, alcohol and other duties, corporation tax, inheritance tax, capital gains tax to name but a few. Who pays? we all do from the cradle to the grave.
Politicians and newspapers are blurring the lines between tax avoidance (perfectly legal) and tax evasion (not legal), the difference between avoidance and evasion is, according to Dennis Healey "..the thickness of a prison wall). Claiming personal allowances and business expenses are examples of tax avoidance, to my mind we are criminalising by attitude something that should not be.
The increase in personal allowances lifts some people out of paying 20% income tax, but not NIC and other taxes and duties – however the Chancellors slight of hand is such that more people will start paying 40% tax, and it will yield more to the Treasury.
There is a planned cap of £50,000 on what donors can claim back in tax by way of Gift Aid payments – it is broadly equivalent to cash donations in a year of £250,000 – this in my opinion will not impact on the majority of charities who do normally receive such amounts. In a perverse way there is an opportunity for Charities to utilise Gift Aid to mutual advantage, for both higher rate taxpayers (total income of £42,475 for 2012-13 and £41,450 for 2013-14) and the charities.
One area of particular interest is for landlords and property investors, if we look beyond the announced stamp duty 'crackdown' there are plans, for example to alter the position regarding CGT and non-residents, and IHT for transfers to non-domiciled persons.
We have published an article overviewing the Budget impact on landlords and property investors which is freely available.