£107.45 – the largest ever cash rise in the basic state pension. The pension credit will be uprated by £5.35 and the working age benefits will also be uprated in line with September’s CPI inflation number of 5.2%. The government have said that they will also uprate with prices the disability elements of tax credits, and increase the child element of the Child Tax Credit by £135 in line with inflation too but will not uprate the other elements of the Working Tax Credit this coming year. Given the size of the uprating this year, they will no longer go ahead with the additional £110 rise in the child element, over and above inflation, that was planned. Business Tax The UK corporate tax rate has already fallen from 28% to 26%, and it has been confirmed that it will fall again next April to 25%. Simplification of the tax code for businesses and individuals is set to continue under consultation on ideas to merge the administration of income tax and National Insurance. From April 2012, anyone investing up to £100,000 in a qualifying new start up business will be eligible for income tax relief of 50% (regardless of the rate at which they pay tax). For one year only, the government will also waive any tax on capital gains invested through the new scheme. In the Budget back in March, the Chancellor provided a holiday on business rates for small firms until October of next year. This rate relief holiday has now been extended until April 2013. And to help all businesses with next year’s rise in business rates, the government will allow companies to defer 60% of the The government will also ensure that the amount of tax relief given to employers making asset-backed pension contributions to registered pension schemes accurately reflects the amount of payments made, and does not give rise to unintended excess relief. Legislation has been introduced under Finance Bill 2012 to ensure that the amount of tax relief given to employers using ABC arrangements reflects accurately the total amount of payments the employer makes to the pension scheme directly or through a special purpose vehicle (for example a partnership). This measure will have effect on and after 29 November 2011. The following documents have been published; Summary of Responses to Consultation Tax Information and Impact Note draft legislation and explanatory note Written Ministerial Statement National Loan Guarantee Scheme There are plans to launch a National Loan Guarantee Scheme which will work on the simple principle that the low interest rates that the government can borrow at, will be used to reduce the interest rates that small businesses can borrow at. New loans and overdrafts to businesses with a turnover of less than £50 million will be eligible for the scheme so it stays focused on smaller companies. The government are getting state aid approval so that the National Loan Guarantee Scheme will be up and running in the next few months. Initially £20 billion of these guarantees will be available over the next two years. £1 Billion Business Finance Partnership This is aimed at Britain’s mid-sized companies where the government will invest in funds that lend directly to these businesses, in partnership with other investors like pension funds and insurance companies. It will give these mid-cap companies a new source of investment outside the traditional banks. If the Business Finance Partnership takes off, the Chancellor has said that he will increase its size and develop further partnerships ideas and ideas for new bond issuance to help Britain’s small and medium sized firms get credit flowing. Housing The Government will also use the low interest rates secured to help young families who want to buy a home but can’t afford the very large deposits that banks are now demanding. Mortgage indemnities will be used to help 100,000 such families buy newly built homes. Construction firms will also be helped that can’t get bank finance with a £400 million fund that increase in their bills to the two following years. Employer asset backed pension contributions
CIPP Policy News Journal
09/10/2012, Page 207 of 234
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