Budget 2012: Family lawyers must be aware of budget changes

Budget 2012: Family lawyers must be aware of budget changes

This week saw Chancellor George Osborne give his third budget. So far it has received a mixed response, with many newspapers focusing on the freeze to pensioners’ incomes and the increase of the tax threshold to £9,205 by April 2013.

However, there are many provisions which will affect families, and so family lawyers have been encouraged to study the budget carefully for the impact that it may have on their clients.

Tax evasion and tax avoidance

Tax avoidance has been in the news recently, with campaigners highlighting the astonishing levels of tax avoidance conducted by big UK businesses, as well as by government ministers, and even one candidate looking to be next London mayor.

The Chancellor made plain his moral opposition to tax evasion, and aggressive tax avoidance. Tax evasion, the deliberate act of non-payment of taxes owed continues to be a criminal offence. Aggressive avoidance will be tackled with a ‘General Anti-Avoidance’ rule, which the Government is looking to introduce in 2013.

Corporation tax and business incentives

The main rate of corporation tax will decrease from 26% to 24%, backdated to April 1st 2011. This will be added to with a further decrease of 1% a year for the next two years. By 2014, the UK’s corporation tax rate would then be 22%, one of the lowest in Europe, aimed at attracting new investment from overseas business. The Chancellor also announced new tax relief schemes for investments into small businesses, and increased funding for technology research organisations.

Capital gains

The Chancellor announced an extension on the limit on the value of shares which may be purchased through the Enterprise Management Incentive, from £120,000 to £250,000. He also announced that the value of those shares would be subject to a tax rate of just 10%, rather than the standard rate of 28%.

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