George Osborne presented the 2011 Budget on Wednesday 23 March 2011.
These blogs focus on the direct and indirect tax measures announced, as well as the announcements made previously which affect the 2011-12 tax year and beyond.
It concentrates on the issues likely to affect you, your family and your business. To help you decipher what was said I have included some comments too.
If you have any questions please do not hesitate to contact me for advice.
Main Budget proposals
- The personal allowance for tax will increase by £630 to £8,105 from April 2012. There will be a decrease in the 40% threshold by the same amount.
- Many thresholds for reliefs and taxes will, in future, be increased in line with CPI (Consumer Price Inflation) rather than RPI (Retail Price index). Since CPI is generally lower than RPI, this will generally be an effective cost to the tax payer.
- The approved mileage rate (the rate at which employers may reimburse business mileage tax free) will increase to 45p from 6 April 2011.
- The main rate of corporation tax rate (ie for larger companies) will decrease by 2% (to 26%) from 1 April 2011. This is 1% more than previously announced. It will then continue to fall by 1% per annum until it reaches 23%.
- The threshold for Entrepreneur’s relief (below which gains are taxed at 10% irrespective of income levels) will be increased to cover the first £10 million of lifetime gains.
Key announcements made previously
- The personal allowance for tax will increase to £7,475 from 6 April 2011. The 40% threshold will fall to £35,000 to ensure that higher rate tax payers do not benefit.
- The threshold for employer’s national insurance (NI) will increase to £136 per week and employee’s to £139 per week. This is to compensate lower paid employees for the 1% increase in NI rates (to 12% for employees and 13.8% for employers)
- The corporation tax rate for small companies falls to 20% from 1 April 2011.
The Budget proposals may be subject to amendment in the Finance Act. You should contact me before taking any action as a result of the contents of this summary.