Budget 2011 Summary
March 23rd saw the first budget of the new government. We’ve put together a summary of the headline changes that affect personal and business tax.
Personal Tax
- Personal tax allowance rises by £630 to £8,105 in April 2012 – a real increase of £48 a year or £126 in cash terms
- Consultation on merging National Insurance and Income Tax
- Not proposing to increase taxes for pensioners
- 50p tax rate will be temporary measure
- Income Tax relief on Enterprise Investment Scheme increases from 20% to 30% next month
- Charge on non-domiciled taxpayers increases from £30,000 for those here for seven years to £50,000 for those in the country for 12 years, raising more than £200m
- Council tax frozen or reduced this year in every English council
Businesses
Corporation Tax cut by 2pc from April – rather than 1% as previously announced – and will fall by 1% in each of the next three years to reach 23%. Bank Levy rate to be adjusted next year to offset the effect of Corporation Tax reduction on banks
- Small business rate relief holiday extended by one year to October 2012, at a cost of £370m
- Entrepreneurs Relief scheme doubles to £10m from April 6
- Direct tax indexed by Consumer Prices Index (CPI), which excludes mortgage costs, from April 2012
- Small companies’ research and development tax credit rises to 200% in April and 225% in 2012
- New 5.75% rate on overseas financing income coming into the UK
Vehicle Excise Duty will rise in line with inflation, while there’s an £800 increase in the amount used to calculate the tax payable on free fuel for company cars, which now stands at £18,800. Van benefit, and van fuel benefit, were though frozen.
The proposed increase in National Insurance contributions has been confirmed, and the chancellor also increased the AMAP rate for drivers using their own car on company business, from 40p per mile to 45p for the first 10,000 miles, with the 25p rate remaining after that.
For more detailed information see the Budget 2011 Tax changes.