Despite the pre-Budget "leaks" and there were plenty of surprises in George Osborne's 2012 Budget.

Key highlights are:

From 22 March 2012: Stamp Duty Land Tax
  • A rate 15% on properties worth £2million + sold via a corporate envelope
  • A 7% rate on properties worth £2million
  • Block on sub-sale relief

From April 2012

  • Corporation tax main rate 24% (was set to be 25%)
  • Increase in Bank Levy
  • Capital allowances: new Enterprise Zones inc in Scotland, Wales and N.Ireland
  • Capital Gains Tax - review relief where residential property is held by offshore companies.
  • A limit on all uncapped income tax reliefs.
  • Enterprise Management Initiatives (EMI) increase option limit to £250,000.
  • Increase in car fuel benefit multiplier to £20,200.

From April 2013

  • Personal allowance increase to £9,205
  • Higher rate of income tax decreases to 45%
  • Freeze on age related allowance
  • NEW TAX: Child Benefit Income tax charge
  • Corporation tax main rate 23%
  • Small firms allowed to cash account
  • Introduction of a General Anti-abuse Rule

Note for paid Subscribers: you also have acces to our Finance Bill 2012: tax planner this provides a rolling tracker of all key measures including secondary legislation and disappearing tax reliefs

Where something was announced in Budget 2012 we say "NEW"

Personal Allowances

From April 2012

  • £8,105 for a single person, £10,500 if you are over 65, and £10,660 if you are over 75
  • The 40% tax band starts at £34,370 (was £35,001)
  • No changes to the 50% band

NEW from April 2013

  • £9,205 for a single person
  • Age allowance frozen for new pensioners
  •  top income tax rate falls to 45%

See Tax rates and allowances

Child Benefit Tax Charge

NEW: from 7 January 2013

  • Where net income in 2012/13 (and in subsequent years) exceeds £50,000, a tax charge will apply at 1% on each £100 of income between £50,000 and £60,000.
  • For taxpayers with income of £60,000 the charge will not exceed child benefit paid.
  • See How to work out the Child Benefit Tax charge

Cap on unlimited tax reliefs

NEW: from 6 April 2013

  • Anyone seeking to claim more than £50,000 in tax relief will be capped at the greater of 25% of income or £50,000

Comment: considerable concern already expressed about how this will affect loss reliefs and Gift Aid but this is hopefully subject to consultation.

Small business tax reporting

NEW: from April 2013

  • Cash accounting optional if turnover < £77,000
  • Simplified expenses system for business use of cares, motorcycles and home

Corporation tax

NEW from April 2012

  • Main rate 24%

NEW: from April 2013

  • Main rate 23%
  • Tax breaks for the creative sector (video games, animation & and "high-end" TV)
  • Above the line R & D credits for big companies
  • Disincorporation relief for small companies

Seed Enterprise Investment Scheme (SEIS)

From April 2012:

A modified version of the EIS scheme aims to raise money for new start-ups.

Key features:

  • 50% tax relief on investments of up to £100,000 per investor, to a maximum of £150,000 per investee company
  • Available to directors - although unable to hold more than 30% of the company
  • A Capital Gains holiday for assets disposed of in 2012/13 where gains are reinvested in the SEIS in the same year.
  • See Seed Enterprise Scheme (SEIS)

Enterprise Investment Scheme (EIS)

From April 2012:

  • NEW: the amount that a qualifying company may receive is increased to £5 million
  • The amount that an individual may invest under EIS is increased to £1 million.
  • Loan capital will not be included when considering the 30% control test.
  • Non-qualifying trades to include those in receipt of the feed in tariff and acquire shares.

See Enterprise Investment Scheme (EIS)

Statutory residency test

From April 2013

  • A statutory residence test and legislating split year treatment

The remittance basis

From April 2012

  • The Remittance basis charge increases from £30,000 to £50,000 for long term non-residents.
  • Certain property can now be brought into the UK and is not treated as remitted
  • See Remittance basis (overseas income)

IHT: 4% rate reduction where 10% or more left to charity

From April 2012

  • Where 10% or more of an estate is left to charity the estate will attract a 10% discount on the rate of IHT paid. This means it will attract IHT of 36% instead of 40%.
  • This relief will be given by splitting an individual's estate into three components in order to allocate reliefs, see IHT relief in 2012: 10% discount

NEW: from April 2013

  • Increase in the IHT exempt amount for a non-dom spouse or civil partner (subject to consultation)
  • Periodic charges on trusts simplication (subject to consultation)
Stamp Duty Land Tax
NEW from 21 March 2012
  • A rate 15% on properties worth £2million + sold via a corporate envelope
  • Block on sub-sale relief

NEW from 22 March 2012

  • A 7% rate on properties worth £2million

Capital Gains Tax (CGT)

Foreign currency bank accounts

From 6 April 2012

  • Gains made on foreign currency bank accounts will be exempted from CGT
  • Affects individuals, trustees and personal representatives

CGT: residential property held by an offshore non-natural person

NEW from April 2013

  • A CGT charge, subject to consultation in 2012.

CGT roll-over relief and Single Farm payments

  • S155 TCGA amended to ensure that the single farm payment qualifies for roll-over relief back dates so this affects disposals on or after 1 January 2009.
  • See CGT reliefs

CGT annual exempt amounts

From 2013

Employees and benefits

Share schemes

  • A review is ongoing in order to see what might be done to promote wider employee share ownership.

Enterprise Management Initiatives (EMI)

NEW from April 2012

  • The limit on the value of shares over which options may be held by an employee under EMI will be increased from £120,000 to £250,000.

NEW Finance Bill 2013

Car and van benefits

From April 2012

  • NEW: Car fuel benefit multiplier increased to £20,200.
  • NEW: Van fuel benefit frozen at £550
  • Security enhanced features: are not to be regarded as accessories provided tha the nature of the employment creates a threat to personal security.
  • See Company cars

Luncheon Vouchers for employees

Withdrawn from April 2013 - 15p per day no longer qualies for tax relief

Cycle to work schemes - breakfast

From 6 April 2013


From April 2013

  • NEW: the rules will be amended to prevent employers paying pension contributions to employees' family members as part of a remuneration package.

MPs: tax free resettlement pay

New: from April 2012

  • Any MP involuntarily re-unseated will not be taxed on the first £30,000 of resettlement payment paid by the Parliamentary Standards Committee.

UK Switzerland Agreement

  • IT, CGT, IHT: a one-off levy on financial assets in Switzerland and withholding tax deducted from income and gains arising in Switzerland from 1/1/2013

Exemption from UK taxation for foreign sports stars

Football Championship League Final 2013

  • An employee or contestant of an overseas team that completes in the final will be exempt from income tax if non-UK resident at the time of the final (a similar exemption applied to the 2011 League).

Glasgow Commonwealth Games 2014

  • Foreign atheletes will be exempt from income tax if non-UK resident at the time of the final.

Capital allowances - cars

From April 2013

  • Extend First Year Allowances low emissions cars for a further two years
  • Emissions main car rate drops to 130g/km (previously 160)

Enterprise Zones - plant and machinery

From 1 April 2012

100% allowances on investment of up to €125 million in plant and machinery by UK resident trading companies for five years from 1/4/2012

  • Certain sectors excluded
  • Unincorporated businesses, partnerships of companies not eligible

Energy Saving Plant and Machinery

  • From 1/4/2012 no Enhanced Capital Allowance (ECA) for expenditure on plant and machinery that generates or produces electricity or heat under the feed-in tariff or renewable heat incentive scheme.
  • No ESC from 1/4/2014 for combined heat and power equipment installations
  • From April 2012 expenditure on solar panels is treated at the special rate (as for long life assets)
  • From April 2013 scheme extended a further five years

See Enhanced Capital Allowances (ECA)


  • Changes are being made to current rules to ensure a tax write off is given only once during an asset's life
  • For expenditure treated as being incurred after April 2012 capital allowances on fixtures will be available to a purchaser provided that:
  • The seller pools expenditure prior to transfer to the purchaser
  • Seller and buyer have 2 years to fix the transfer value
  • The seller confirms the tax disposal value
  • See Fixtures: overview

Flat Conversion Allowance

  • 100% allowance on the costs of conversion of empty or underused space above shops and other commercial premises to residential use.
  • Withdrawn from April 2013
  • See Flat Conversion Allowance (FCA)

Business Premises Renovation Allowance (BPRA)

  • This 100% allowance is given on expenditure incurred on bringing redundant commercial property situated in designated disadvantaged areas back into use.
  • Extended until 2017
  • See Business Premises Renovation Allowance

Gas refuelling equipment

  • 100 FYA for plant and machinery used in gas, biogas and hydrogen refuelling stations extends to 31 March 2015.

See: Finance Bill rolling planner for details of key changes in capital allowances as already enacted and combined with these changes.

Patent Box

From April 2013

  • Corporation Tax relief: reduced rate on income deriving from the exploitation of patents

See Patent Box

R & D

  • Enhanced deduction 100% to 125%
  • Increased relief for pre-trading expenditures to be claimed as a deemed trading loss.
  • Reduces payable credit to 11% of surrendered loss
  • £10,000 pa minimum expenditure condition removed


With big changes expected to GAAP, new measures are designed to ensure that income will only be taxed once when there is a change in accounting practices.


NEW: changes to iron out some anomalies on:

  • Aligining approved alterations to listed buildings with repairs and maintenance to existing buildings
  • Standard rating of hot food ('pasty tax') and sports drinks
  • Standard rating of hairdressers' chairs
  • Standard rating purchase of holiday caravans
  • VAT treatment of self-storage

Business without an establishment in a member state is prohibited from benefiting from that State’s registration threshold.


NEW: latest tax schemes are targeted involving

  • Settlement legislation: corporate settlors
  • IHT settled property
  • Stamp Duty Land Tax: sub-sale relief
  • Capital allowances: long funded leases
  • Sale of lessor companies
  • Waste disposal site restoration relief

See Anti-avoidance measures: Budget 2012

Disclosure of Tax Avoidance Schemes – DOTAS

  • Broadened to extend to more SDTL schemes, and may require some schemes to be disclosed one more time

Sch 36 Information Powers

New power to require a 3rd party to provide details about a taxpayer.

    Tax Agents: civil penalties for dishonest conduct

NEW from 1 April 2013

  • Penalties for dishonest conduct to range from £5,000 to £50,000
  • Legislation broadly drafted

General anti-abuse rule (GAAR)

NEW: to be introduced in an attempt to crack down on tax schemes which are contrary to Parliament's intentions, following further consultation from April 2013


  • Gifts to the nation: individuals and companies, reduction in IT, CGT or CT when a pre-eminent object is gifted to the nation.
  • IHT relief on charitable bequests: reduced rate of 10% from 6/2/12
  • See IHT relief in 2012: 10% discount

Gift Aid

  • SA donate scheme dropped from April 2012 – too expensive to administer

  • No further news on Gift Aid and cash collections.

  • From 6 April 2013 the proposal to place a cap on unlimited tax reliefs will ensure that anyone seeking to claim more than £25,000 in tax relief will be capped at the greater of 25% of income or £50,000 - potential to block donations under Gift Aid by major donors.

Bank Levy

  • From 1 January 2012 0.088%
  • NEW: From 1 January 2013 0.105%.