BRITISH CHANCELLOR George Osborne has announced his 2012 Budget for the United Kingdom, including immediate cuts to the rate of corporation tax and a new tax credit on animation and video game companies.
Among the measures announced were increases to the personal income tax threshold and a cut to the top rate of income tax, as well as increases to stamp duty and a cap on the tax allowances claimed by top earners.
Corporation tax, which had stood at 26 per cent, has been cut by 1 per cent immediately, with a second 1 per cent cut taking effect in two weeks’ time. The rate will be further cut, to 22 per cent, by 2014.
Osborne’s third budget also includes a tax credit on profits from video game and animation companies – a move perhaps intended to entice companies which before now had located in the Republic of Ireland.
The headline news within the UK will be the abolition of the 50 per cent tax rate, however, which had been heavily anticipated and attacked by the Labour opposition as being a move to favour high-earning Conservative supporters.
Osborne told the House of Commons that cutting the rate – to 45 per cent – would only hit government income by around £100 million, with this cash made up by increasing other taxes such as stamp duty on high-value property, and a limit on tax credits for top earners.
Average-earning families were given some relief too, however, with the income threshold applied for child benefit being raised from £42,475 to £50,000, with incremental decreases in the rate up to £60,000 – a move which will mean child benefit being paid to 750,000 extra families.
The amount a person can earn before falling into the income tax net has increased from £8,105 to £9,205, with Osborne pledging to have this total raised to £10,000 by the end of the Conservative-Liberal Democrat coalition’s tenure.
Excise on tobacco has been raised by 37p per packet of 20, effective from 6pm this evening. There were no added excises on fuel, though a 3p-per-litre increase is set for August.
Labour leader Ed Miliband, delivering his Commons speech in response, said the measures would mean “millions were paying more, while millionaires pay less”.
The budget for the Northern Ireland office – which in turn helps to fund the Executive in Stormont – will be maintained at around £9.5 billion for each of the next three years. The Budget also gives Northern Ireland the power to set its own air travel taxes.
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