Finance Act 2012
Finance Act 2012
2012 CHAPTER 14
An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
[17th July 2012]
Most Gracious Sovereign
WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-
PART 1
Income tax, corporation tax and capital gains tax
CHAPTER 1
Income tax and corporation tax charges and rate bands
Income tax
1 Charge for 2012-13 and rates for 2012-13 and subsequent tax years
(1) Income tax is charged for the tax year 2012-13, and for that tax year-
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 50%.
(2) For the tax year 2013-14-
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 45%.
(3) In Chapter 2 of Part 2 of ITA 2007 (rates at which income tax is charged)-
(a) in section 8(3) (dividend additional rate), for ‘42.5%’ substitute ‘37.5%’,
(b) in section 9(1) (trust rate), for ‘50%’ substitute ‘45%’, and
(c) in section 9(2) (dividend trust rate), for ‘42.5%’ substitute ‘37.5%’.
(4) In section 394 of ITEPA 2003 (charge on relevant benefits provided under employer-financed retirement benefits scheme), in subsection (4) for ‘50%’ substitute ‘45%’.
(5) In section 640 of ITTOIA 2005 (capital sums treated as income of the settlor: grossing-up of deemed income), in subsection (6)(b)-
(a) omit the ‘and’ at the end of sub-paragraph (ii),
(b) in sub-paragraph (iii) for ‘or any subsequent tax year.’ substitute ‘, 2011-12 or 2012-13, and’, and
(c) after that sub-paragraph insert-
’(iv) 45%, if the relevant year is the year 2013-14 or any subsequent tax year.’
(6) The amendments made by subsections (3) to (5) have effect for the tax year 2013-14 and subsequent tax years.
2 Basic rate limit for 2012-13
(1) For the tax year 2012-13 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with ‘£34,370’.
(2) Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.
3 Personal allowance for 2012-13 for those aged under 65
(1) For the tax year 2012-13 the amount specified in section 35(1) of ITA 2007 (personal allowance for those aged under 65) is replaced with ‘£8,105’.
(2) Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply for that tax year.
4 Personal allowances from 2013
(1) Chapter 2 of Part 3 of ITA 2007 (personal allowance etc) is amended in accordance with subsections (2) to (6).
(2) In section 35 (personal allowance for those aged under 65)-
(a) in subsection (1), for paragraph (a) substitute-
’(a) was born after 5 April 1948, and’, and
(b) in the heading for ‘ aged under 65’ substitute ‘ born after 5 April 1948’.
(3) In section 36 (personal allowance for those aged 65 to 74)-
(a) for subsection (1) substitute-
(a) was born after 5 April 1938 but before 6 April 1948, and
(b) meets the requirements of section 56 (residence etc).’,
(b) in subsection (2)-
(i) for ‘For’ substitute ‘If the allowance under subsection (1) is greater than the section 35 amount, for’,
(ii) in paragraph (a), for ‘half the excess’ substitute ‘an amount equal to half of that excess income’, and
(iii) in paragraph (b), for the words from ‘amount’ to the end substitute ‘section 35 amount.’,
(c) after that subsection insert-
’(2A) In this section ‘the section 35 amount’ means the amount of any allowance to which the individual would be entitled under section 35 for the tax year if the individual had been born after 5 April 1948.’, and
(d) in the heading for ‘ aged 65 to 74’ substitute ‘ born after 5 April 1938 but before 6 April 1948’.
(4) In section 37 (personal allowance for those aged 75 and over)-
(a) for subsection (1) substitute-
(a) was born before 6 April 1938, and
(b) meets the requirements of section 56 (residence etc).’,
(b) in subsection (2)-
(i) for ‘For’ substitute ‘If the allowance under subsection (1) is greater than the section 35 amount, for’,
(ii) in paragraph (a), for ‘half the excess’ substitute ‘an amount equal to half of that excess income’, and
(iii) in paragraph (b), for the words from ‘amount’ to the end substitute ‘section 35 amount.’,
(c) after that subsection insert-
’(2A) In this section ‘the section 35 amount’ means the amount of any allowance to which the individual would be entitled under section 35 for the tax year if the individual had been born after 5 April 1948.’, and
(d) in the heading for ‘ aged 75 and over’ substitute ‘ born before 6 April 1938’.
(5) In section 41 (allowances in year of death), omit subsections (2) and (3).
(6) In section 57 (indexation of allowances)-
(a) in subsection (1)-
(i) in paragraph (a) for ‘aged under 65’ substitute ‘born after 5 April 1948’, and
(ii) omit paragraphs (b) and (c), and
(b) in subsection (3)(a), for ‘, 36(1), 37(1),’ substitute ‘and’.
(7) In section 508A of ICTA (contemplative religious communities: profits exempt from corporation tax), in subsections (5) and (9)(b) for ‘under 65’ substitute ‘born after 5 April 1948’.
(8) The amendments made by this section have effect for the tax year 2013-14 and subsequent tax years.
Corporation tax
5 Main rate of corporation tax for financial year 2012
(1) In section 5(2)(a) of FA 2011 (main corporation tax rate for financial year 2012 on profits other than ring fence profits), for ‘25%’ substitute ‘24%’.
(2) The amendment made by this section is treated as having come into force on 1 April 2012.
6 Charge and main rate for financial year 2013
(1) Corporation tax is charged for the financial year 2013.
(2) For that year the rate of corporation tax is-
(a) 23% on profits of companies other than ring fence profits, and
(b) 30% on ring fence profits of companies.
(3) In subsection (2) ‘ring fence profits’ has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).
7 Small profits rate and fractions for financial year 2012
(1) For the financial year 2012 the small profits rate is-
(a) 20% on profits of companies other than ring fence profits, and
(b) 19% on ring fence profits of companies.
(2) For the purposes of Part 3 of CTA 2010, for that year-
(a) the standard fraction is 1/100th, and
(b) the ring fence fraction is 11/400ths.
(3) In subsection (1) ‘ring fence profits’ has the same meaning as in Part 8 of that Act (see section 276 of that Act).
CHAPTER 2
Income tax: general
Child benefit
8 High income child benefit charge
Schedule 1 contains provision for and in connection with a high income child benefit charge.
Anti-avoidance
9 Post-cessation trade or property relief: tax-generated payments or events
(1) Part 4 of ITA 2007 (loss relief) is amended as follows.
(2) In section 96(7) (post-cessation trade relief), after paragraph (b) insert-
’(ba) section 98A (denial of relief for tax-generated payments or events),’.
(3) After section 98 insert-
’98A Denial of relief for tax-generated payments or events
(1) Post-cessation trade relief is not available to a person in respect of a payment or an event which is made or occurs directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements (and, accordingly, no section 261D claim may be made in respect of the payment or event).
(2) For this purpose ‘relevant tax avoidance arrangements’ means arrangements-
(a) to which the person is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a reduction in tax liability as a result of the availability of post-cessation trade relief (whether by making a claim for that relief or a section 261D claim).
(3) In this section-
(a) ‘arrangements’ includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
(b) ‘section 261D claim’ means a claim under section 261D of TCGA 1992.’
(4) In section 125(6) (post-cessation property relief), after paragraph (b) insert-
’(ba) section 98A (denial of relief for tax-generated payments or events),’.
(5) The amendments made by subsections (2) and...
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