Budget Summary 2011

The personal allowance available to individuals whose net income is below £100,000 will, from 6 April 2011, be set at £7,475.  From 6 April 2012, this will increase to £8,015. The Government are committed to eventually increasing the personal allowance to £10,000.

From 6 April 2011, the basic rate band will be set at £35,000. From 6 April 2012, this will decrease to £34,370. Presumably, the basic rate band will be further decreased to prevent those individuals with higher income from obtaining an unfair advantage from the on-going increase to the personal allowance.

From 6 April 2011, the rate at which the tax reducer is given will increase from 20% to 30%. The maximum subscription on which an individual may claim relief will continue to be £500,000. It is proposed that this will increase to £1 million from 6 April 2012.

Higher rate or additional rate taxpayers who join qualifying employer supported childcare schemes on or after 6 April 2011 will have their tax free benefit reduced from the standard £55 per week to £28 and £22 respectively.

From 6 April 2011, the published rates for the employee’s mileage allowance will be –

45p for the first 10,000 business miles; then
25p for each business mile thereafter.

The above rates apply to employees who use their own car or van in the course carrying out the duties of their employment. The rates for passengers (5p), cycles (20p) and motor-cycles (24p) are to remain the same as before.

Currently, non-domicile taxpayers who claim the remittance basis of taxation on their foreign income and/or gains, but who have been UK resident for 7 of the 9 preceding tax years, are subject to a £30,000 long term resident charge. This is payable in addition to the UK tax suffered.
From 6 April 2011, the longer term resident charge will be £50,000 for taxpayers who have been UK resident for 12 years or more.

The lifetime limit on gains qualifying for the relief will be increased from £5 million to £10 million with effect from 6 April 2011.

Companies who are liable to tax at the main rate or marginal rate will benefit from an on-going reduction to the main rate. From 1 April 2011, the main rate will be set at 26%. The rate will fall to 25% from 1 April 2012, and 1% each year thereafter until 1 April 2014, when it will be set at 23%.

Companies that are small or medium sized enterprises can currently deduct an additional 75% of their qualifying R&D expenditure in arriving at their adjusted profit or loss. From 1 April 2011, the allowance will be increased to 100% and, from 1 April 2012, this is expected to be upped to 125%.

From 1 April 2012, changes will be made to the conditions for the above additional deduction and, also, to the rules governing the surrender by a company of its losses in return for a tax credit.

Currently, where a person invests in plant or machinery which has an expected useful life of less than 4 years, they are allowed to claim a separate writing down allowance rather than allocating the expenditure to a pool. The SLA cut-off period will be extended to 8 years with effect from –

1 April 2011 for companies; and
6 April 2011 for individuals.

Under the Gift Aid scheme, where a donor or a person connected with him receives a benefit in excess of £500 from a charity to which the donation has been made, the tax relief that donor may obtain is restricted. From April 2011, the benefit cap will be increased to £2,500. There will be a different cap for donations over £10,000.

The facility for individuals, personal representatives and trustees to donate their tax refund to a charity will be abolished for returns made in respect of the 2011-12 and subsequent tax years.

The above is for information only and is not intended to be specific advice.
For further information please contact either:-
Alastair Vickers
At
AYRES BRIGHT VICKERS
Telephone:  01903 234552
Email:  abv@ayresbrightvickers.co.uk