Budget 2011 – Headlines
On Wednesday 23 March 2011 the Chancellor of the Exchequer delivered his Budget Report to the House of Commons. Below are outline details of the main points raised of which we wish to make you aware.
Our full budget report will be available on our website shortly. This summary contains a number of important points and reminders and we would urge all our clients to access the full report, read this and approach us with any questions this may raise.
Should anyone require a printed version of our Budget news report please call Laura here on 023 9279 9744.
Personal Tax Allowance
This increases by £1,000 to £7,475 from 6 April 2011. A further increase to £8,105 was announced to apply from 6 April 2012.
Tax Free Mileage Allowances
The 40p rate will be increased to 45p from 6 April 2011. The 10,000 mile per annum limit for the higher rate and the lower 25p rate will remain the same.
Tax Efficient Investments
The rate of relief for investing in companies under the Enterprise Investment Scheme (EIS) will be increased from 20% to 30% for shares issued on or after 6 April 2011, subject to State aid approval. Intended increases in investment limits will apply to shares issued on or after 6 April 2012.
All UK resident children under the age of 18 who do not have a Child Trust Fund account will be eligible for a junior ISA account. These will have similar tax-free incentives as normal ISA’s and will be available from Autumn 2011.
Capital Gains Tax
The lifetime limit for the relief which effectively reduces to 10% the tax on the sale of appropriate business assets will be increased from £5 million to £10 million.
This will increase to £10,600 from 6 April 2011.
The main rate of Corporation Tax for companies with taxable profits above £300,000 pa will be reduced by a further 1% to 26%, from 1 April 2011.
The small companies rate currently at 21% will be reduced to 20% from the above date as previously announced.
Research & Development Tax Credits
With effect from 1 April 2011, it is intended for tax relief on research and development to be calculated on 200% of allowable expenditure (currently 175%).
Fuel Duty Rates
With effect from 6pm 23 March 2011, the main fuel duty rate will be cut by 1p per litre and other intended increases reported in 2009 will be removed or reduced.
Stamp Duty Land Tax
For bulk purchases of land/property, the SDLT rate will be amended to that which applies to the average cost of a single property within multiple property purchases, subject to a minimum1%. This will be effective from Royal Assent of the Finance Bill in the Summer.
The Gift Aid scheme will be simplified and limits increased.
Shortage of Finance
The Chancellor reported an agreement from the banks to lend 15% more to small business this year.
Car Fuel Benefit
The amount on which the percentage (based on CO2 emissions) is applied to determine the benefit for the use of private fuel provided by an employer will be increased from £18,000 to £18,800, from 6 April 2011.
The registration and deregistration turnover thresholds will be increased by £3,000 to £73,000 and £71,000 respectively from 1 April 2011.
Integration of Income Tax & National Insurance
The Chancellor is considering the integration of these to simplify the operation of PAYE by employers. There will be a consultation period over the next year and any implementation is likely to take a number of years. The Chancellor stressed that this is not being undertaken to provide an opportunity to increase tax and NIC rates, but to make the operation of the system more efficient.