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News - 26 March 2012

UK Tax Datacard 2012/13 Part One

Income tax

Bands
                                                                                                      2012/13                        2011/12
The first: £0-£34,370 (£0-£35,000)                                        20%                              (20%)
£34,371-£150,000 (£35,001-£150,000)                               40%                              (40%)
Over: £150,000 (£150,000)                                                     50%                               (50%)

Dividends are taxed at 10% (10%), 32.5% (32.5%) or 42.5% (42.5%) as the top slice of total income.

Other savings income, primarily bank and building society interest, is taxed at 10% up to £2,710 (£2,560). This 10% rate is not available if taxable non-savings income exceeds £2,710 (£2,560).

There are special rules for trusts, and also for individuals with income assessable on
the remittance basis.

From 6 April 2013, the 50% rate of income tax is expected to reduce to 45%.

From 7 January 2013, an additional tax charge will apply to claw back child benefit where one income in a household exceeds £50,000.

Personal allowances
                                                                                                  2012/13               2011/12
Personal                                                                                  £8,105                (£7,475)
Income limit for personal allowance (a)                           £100,000            (£100,000)
Age allowance (age at end of tax year) (b):
Personal: age 65-74                                                             £10,500               (£9,940)
Personal: age 75 or over                                                      £10,660              (£10,090)
Married couple’s (c)                                                               £7,705                (£7,295)
Income limit for age allowances                                         £25,400              (£24,000)
Blind person’s allowance                                                     £2,100                (£1,980)

(a) The personal allowance is reduced by £1 for each £2 by which income exceeds £100,000, irrespective of age.

b) Age-related allowances first reduce by £1 for each £2 by which income exceeds the income limit, reducing to a minimum of the personal allowance. Such allowances can be reduced further under (a).

(c) Relief is limited to 10%, and extends to civil partnerships. At least one spouse/ partner must have been born before 6 April 1935. The allowance is reduced where income exceeds the income limit, subject to an absolute minimum of £2,960 (£2,800). In certain circumstances couples may determine how the allowance may best be used.

Pensions
                                                                                                    2012/13            2011/12
Lifetime allowance (a)                                                           £1,500,000       (£1,800,000)
Equivalent to defined benefit pension                                £75,000             (£90,000)
Maximum contribution annual allowance (b)                    £50,000             (£50,000)
Tax on excess Marginal rate (marginal rate
Normal minimum pension age                                            55                       (55)

(a) Special rules can apply to individuals with larger benefits at 5 April 2006 and for those with benefits over £1,500,000 on 5 April 2012. Excess over the lifetime allowance may be subject to a 25% charge plus income tax on balances drawn, or 55% for lump sum benefits.

(b) Unused allowances from the previous three years (by reference to a limit of £50,000 p.a.) may be carried forward, potentially increasing the current year’s allowance in 2012/13 and subsequent tax years.

Company cars – annual benefits

The annual benefit is a percentage of list price, with the percentage dependent on the level of CO2 emissions. The minimum benefit is 5% for emissions of 75g/km or less. For emissions of over 75 and up to 99g/km, the rate is 10%. For emissions of 100-104g/km, the rate is 11% and increases by 1% for each additional full 5g/
km up to a maximum charge of 35% for emissions of 220g/km or more. Emission levels are rounded down to the nearest multiple of five. List price includes certain accessories, but is reduced for capital contributions of up to £5,000.

There is a diesel supplement of 3% for all bands, subject to a maximum charge of 35%.

For vans, the taxable benefit for significant private use is £3,000 (£3,000).

The benefit charge for electric cars and vans is nil until 5 April 2015.

Fuel: if fuel is provided for private use in a company car, the car benefit percentage is applied to £20,200 (£18,800).

The benefit for fuel provided for a van with significant private use is £550 (£550).

National insurance contributions (NIC)

Class 1 employees:

Weekly earnings                                                                   contracted in             Contracted out
Up to £107 (£102)                                                                Nil (nil)                        Nil (nil)
£107.01-£146 (£102.01-£139)                                          Nil (nil)                        Rebate 1.4% (1.6%)
£146.01-£770 (£139.01-£770)                                          n/a                               10.6% (10.4%)
£770.01-£817 (£770.01-£817)                                          n/a                               12% (12%)
£146.01-£817 (£139.01-£817)                                         12% (12%)                  n/a
Over £817 (over £817)                                                        2% (2%)                       2% (2%)

Class 1 employers:
Weekly earnings                                                                  contracted in               Contracted out
Up to £107 (£102)                                                                Nil (nil)                         Nil (nil)
£107.01-£144 (£102.01-£136)                                          Nil (nil)                         Rebate 3.4% (3.7%)
£144.01-£770 (£136.01-£770)                                          n/a                                10.4% (10.1%)
£770.01-£817 (£770.01-£817)                                          n/a                                13.8 % (13.8%)
£144.01-£817 (£136.01-£817)                                          13.8%                          (13.8%) n/a
Over £817 (over £817)                                                        13.8% (13.8%)            13.8% (13.8%)
Other:
Class 1A (employers only): 13.8% (13.8%) based on the amounts of taxable benefits.
Class 1B (employers only): 13.8% (13.8%) in respect of amounts in a PAYE settlement agreement and the income tax thereon.
Class 2 (fl at rate for self-employed): £2.65 (£2.50) per week.
Class 3 (voluntary): £13.25 (£12.60) per week.
Class 4 (self-employed): 9% (9%) of profits between £7,605 (£7,225) and £42,475 (£42,475) per annum and 2% (2%) on profits above £42,475 (£42,475).

Bank levy

Annual tax on certain short-term chargeable liabilities and long-term chargeable equity and liabilities above an aggregate of £20 billion of most UK based banks.

Short-term liabilities 0.078%

Long-term equity and liabilities 0.039%

Lower rates applied prior to 1 January 2012.

From 1 January 2013, the rates will increase to 0.105% and 0.0525% for short-term liabilities and long-term equity and liabilities respectively.

Insurance premium tax
Standard rate 6%
Higher rate 20%


Capital gains tax
                                                                                                       2012/13                2011/12
For standard rate taxpayers                                                     18%                       (18%)
For trustees and higher/additional rate taxpayers               28%                       (28%)
Annual exempt amount – individuals                                    £10,600                 (£10,600)
Annual exempt amount – trusts                                             £5,300                    (£5,300)
Entrepreneurs’ relief lifetime limit                                         £10,000,000          (£10,000,000)
Entrepreneurs’ rate                                                                    10%                       (10%)

Inheritance tax

Nil rate band: up to £325,000 (£325,000) – 0% (0%)
Over £325,000 (£325,000) – 40% (40%).

Reduced charge on lifetime gifts within seven years of death applies.

A surviving spouse or civil partner may claim the unused proportion of an earlier deceased spouse’s or civil partner’s nil rate band up to the current nil rate band.
From 6 April 2012, a reduced rate of 36% applies when 10% or more of a net estate is left to charity.

Tax-efficient investments

                                                                                                  2012/13              2011/12
ISA investment limit                                                               £11,280             (£10,680)
Cash ISA maximum investment                                         £5,640                (£5,340)
Junior ISA investment limit cash or shares (a)                £3,600                (£3,600)

(a) From 1 November 2011, for children aged under 18 without a Child Trust Fund.

Venture capital trusts (VCTs): income tax relief at up to 30% on investment up to £200,000.

Enterprise investment scheme (EIS): income tax relief at up to 30% on qualifying share subscription between £500 and £1,000,000 (£500,000).

Seed enterprise investment scheme (SEIS): income tax relief of 50% on investment up to £100,000, together with rollover of gains made in 2012-13 into the subscription.

Corporation tax

Financial year (from 1 April)                                                    2012                     2011
Small profits rate £0-£300,000                                               20%                    (£0-£300,000 20%)
Marginal rate £300,001-£1,500,000                                      25%                    (£300,001-£1,500,000 27.5%)
Main rate (a) Over £1,500,000                                                 24%                    (Over £1,500,000 26%)

(a) The main rate will further decrease by 1% in each year until financial year 2014 when the main rate will be 22%.

Capital allowances

Expenditure on:                                                                               2012/13                2011/12
Plant and machinery: (a)                                                               18%                        (20%)
Plant and machinery in certain enterprise zones                     100%                      (n/a)
Motor cars on or after April 2009 – CO2 emissions
< 110g/km                                                                                          100%                      (100%)
110g/km-160g/km (a)                                                                      18%                        (20%)
> 160g/km (a)                                                                                     8%                         (10%)
Motor cars pre April 2009 (a) (b)                                                    18%                        (20%)
New and unused zero emission goods vehicles                      100%                      (100%)
Long life assets/integral features in buildings (a)                      8%                         (10%)
Patent rights and know-how (a) (c)                                                25%                        (25%)
Mines, oil wells, mineral rights (a) (d)                                           25%                        (25%)
Research and development                                                           100%                      (100%)
Energy-saving and water efficient plant and machinery            100%                      (100%)
Renovation of business premises (disadvantaged areas)     100%                      (100%)

There is a 100% annual investment allowance on the first £25,000 (£100,000), per group of companies or related entities, of capital expenditure on plant and machinery including long life assets and integral features, but excluding cars.
(a) These allowances are given on a reducing balance basis.
(b) Subject to a maximum allowance of £3,000 p.a. per vehicle.
(c) For expenditure from April 2002 accounting write downs (and not capital allowances) are allowable deductions for tax.
(d) Acquisition of mineral deposits and rights qualify for 10% p.a.

If you have any questions or concerns about Tax Planning and compliance, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net
 

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