Tuesday, 3 April 2012

Backtracking to a Granny Tax

BUDGET 2011 page 35

1.128  As announced in the June Budget 2010, the Government has reviewed how the CPI can
be used for the indexation of taxes and duties while protecting revenues. Consistent with this,
the default indexation assumption for direct taxes will be the CPI from April 2012. To
ensure employers and older people do not lose out, for the duration of this Parliament the
annual increases in the employer NICs threshold, and the age related allowance and
other thresholds for older people, will be over-indexed compared to the CPI, and will
increase by the equivalent of the RPI. The Government will review the use of the CPI
for indirect taxes once its fiscal consolidation plans have been implemented and the
duty increases it inherited from the previous Government have come to an end.

BUDGET 2012 page 34

Age-related Allowances...

1.200  To support the goal of a single personal allowance for taxpayers regardless of age, and
to spread the tax relief fairly across working age people and pensioners, from 6 April 2013
existing ARAs will be frozen at their 2012–13 levels (£10,500 for those born between
6 April 1938 and 5 April 1948, and £10,660 for those born before 6 April 1938) until
they align with the personal allowance. From April 2013, ARAs will no longer be
available, except to those born on or before 5 April 1948. The higher ARA will only
be available to those born before 6 April 1938. These changes will simplify the system and
reduce the number of pensioners in Self Assessment.

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