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Tax changes 2012-13

Wednesday 14th March 2012

Corporation Tax
The small profits rate paid by contractor companies stays at 20% having been reduced from 21% in April 2011.

Value Added Tax
The standard rate of VAT remains at 20%.
The VAT registration threshold from 1st April 2012 is £73,000.
The de-registration threshold is £71,000.

Dividend Tax
The tax rates on dividends remain unchanged for the 2012/13 tax year:

Basic rate of 10%
Higher rate of 32.5%
Additional rate of 42.5%

Although the above are the official rate due to the tax credit of 10% on dividends the real rates of tax for dividends are:

Basic rate of 0%
Higher rate of 25%
Additional rate of 36.1%

Income Tax
The Personal Allowance rises by £630 to £8,105.
For incomes of £100,000, the value of the personal allowance is reduced by £1 for every £2 over the threshold.

Income Tax - Taxable Bands
The basic 20% rate of income tax applies between £8,105 and £42,475
The higher 40% rate applies between £42,476 and £150,000.
The additional 50% rate applies on income above £150,000.

National Insurance (NICs)
The employers' NIC rate stays at 13.8%. The employee's NIC rate stays at12%.

Approved Mileage Allowance Payments (AMAPs)
The standard car rate stays at 45p for the first 10,000 miles, and 25p thereafter.

Pensions Savings - Tax Relief
The lifetime allowance is being cut from £1.8m to £1.5m.
The annual allowance for personal contributions is staying at £50,000.

Capital Gains Tax
The standard CGT rate for individuals remains at 18% (basic rate), and 28% (higher rate).
The lifetime allowance for Entrepreneurs' Relief is £10m.

Inheritance Tax
The IHT threshold remains at £325,000. The IHT above this threshold is 40%.
From April 2012, a reduced rate of IHT of 36% will be introduced where 10% or more of the net estate is left to charity

ISAs
The ISA limit is increasing by £600 to £11,280 (from £10,680), £5,640 of which can be saved in cash.

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