Tax reforms, support for growth and reward for work formed the centre of George Osborne’s 2012 Budget.
The Chancellor of the Exchequer has announced a continuation of his deficit reduction programme, by taking from the rich and giving to the poor in what has been dubbed the “Robin Hood Budget”.
The main changes affecting the payroll and employee benefits industry are an increase in the personal allowance by £1,100 in April 2013 to £9,205. In the same year, the additional tax rate will be cut from 50p to 45p.
Osborne has also chosen to cap tax reliefs. For those wishing to claim more than £50,000 of relief, a limit of 25 per cent of income or £50,000, whichever is greater, will be introduced. A further crackdown on tax avoidance measures has been revealed, which will look at elements including Income Tax and Corporation Tax.
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The Government’s intention to integrate the operation of National Insurance and Income Tax was reiterated. A consultation is scheduled to be launched next month to further explore the options.
Businesses have welcomed the reduction in Corporation Tax. The rate will reduce from 26 per cent to 24 per cent in April 2012, then down to 23 per cent in April 2013, followed by a further drop to 22 per cent in April 2014.
“An extra one per cent off corporation tax this year could make a big difference to investment intentions,” said John Cridland, Confederation of British Industry Director-General.
He added: “Plans to reduce the top rate of tax to 45p by April 2013 will show our top and aspiring talent that this Government wants them to create wealth here.”
Among the provisions to help businesses, the Chancellor has relaxed the Sunday Trading laws for the period during the Olympics and Paralympics.
Paul Killen, Employment Partner at Osborne Clarke, commented: “Employers will need to consider carefully how they staff these hours bearing in mind an employee’s rights under their contract of employment and, in the absence of a valid employee opt-out, any breach of the maximum working week provisions under Working Time Regulations 1998.”
