The Peterborough Evening Telegraph - - Your -

By James Fran­cis - Di­rec­tor, En­sors Char­tered Ac­coun­tants If you buy a brand new car and dis­cover af­ter one day that it has a 2” scratch in the gleam­ing new paint­work, it is a dis­as­ter. No mat­ter that the ma­jor­ity of the body­work is coated in a per­fect layer of paint and lac­quer, the only thing you will see is the 2” of ex­posed me­tal. And so to the Chan­cel­lor’s 2012 Bud­get. A re­duc­tion in the main cor­po­ra­tion tax rate to 24% with the aim of tak­ing this to 22% and then, pos­si­bly to 20% in the fu­ture. Great news for prof­itable com­pa­nies and cer­tainly in­creases UK com­pet­i­tive­ness. An in­crease in the per­sonal al­lowance from £8,105 for 2012/13 to £9,205 for 2013/14 tak­ing many low in­come in­di­vid­u­als out of the tax sys­tem. A re­duc­tion in the top level of in­come tax from 50% to 45%. There is no over­rid­ing “fair­ness” ar­gu­ment for a 50% rate and we now dis­cover that it has had only a neg­li­gi­ble ben­e­fi­cial im­pact on HMRC’S cof­fers. But for me the glar­ing scratch in the paint­work is the lack of joined up think­ing. Take sim­pli­fi­ca­tion. The age re­lated per­sonal al­lowance is be­ing with­drawn be­cause the con­cept of los­ing £1 of it for ev­ery £2 of in­come over a cer­tain thresh­old is just too complicated. But the Chan­cel­lor then an­nounces that Child Ben­e­fit will not be with­drawn at £50,000, but in­stead will re­duce by 1% for ev­ery £100 earned over £50,000. Is that not “too complicated” a con­cept again? More­over, the Child Ben­e­fit will be with­drawn via the in­come tax sys­tem - re­quir­ing, pre­sum­ably, a self as­sess­ment re­turn where pos­si­bly one is not cur­rently re­quired. The Chan­cel­lor then made great play of the fact that the Labour ad­min­is­tra­tion had caused a huge £16bn dis­tor­tion by sig­nalling an in­crease in the top rate of tax to 50%. Some tax­pay­ers had (some­what pre­dictably) taken their money early (at the 40% rate) cre­at­ing a big tax re­ceipt in the ear­lier year but leav­ing a yawn­ing chasm in the next year’s tax re­ceipts. Should we haz­ard a guess as to what is about to hap­pen as a re­sult of de­fer­ring the de­crease from 50% to 45% un­til April 2013?

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