News Update - May 2011
Tax and NI Rates from April 2011
Click here to download our fact files - TAX RATES 2011-12 and NI RATES 2011-12
News Update - July 2010
Emergency Budget 22 June 2010
A summary of the key Points:
Income tax and National insurance
The personal allowance will be increased from 6 April 2011 by £1,000 to £7,475. For higher and additional rate tax payers this will be offset by a reduction in the basic rate band. The chancellor restated the government’s intention to extend the personal allowance to £10,000 in the longer term.
Proposals to increase employee NI contributions by 1% from 2011/12 are still in place for earnings above the primary threshold and the upper earnings threshold at 12% and 2% respectively.
For employers, the NI rate is also increased by 1 % to 13.8%. (This was already in hand under the last government). The level at which employers start paying NI is to be increased to £131 per week (plus indexation).
A number of changes will be implemented in relation to child and working tax credits including a cap on claims for those earning in excess of £40,000.
The government will review relief for pension contributions – it is looking to restrict tax relief from 6 April 2011.
Furnished holiday letting
The tax regime for UK furnished holiday letting will be retained. It will include properties owned for holiday letting in the EU. The government is looking to change the availability of loss relief on this income in the 2011 Finance Bill.
Capital Gains Tax (for individuals):
The capital gains tax rate increases to 28% for higher rate tax payers but remains at 18% for basic rate tax payers. The change in rate applies from midnight on 22nd June 2010. For those who had unconditional contracts to sell assets BEFORE the budget the old rates can be used (eg exchanged contracts on a property sale subject to final completion after 23 June).
Higher rate taxpayers used to pay 40% Gains Tax only a few years ago. So rates may be increased at a later date - remember this was only an “emergency budget”.
Entrepreneurs' relief remains a possibility with the lifetime allowance increased from £1m to £5m. The annual exemption remains unchanged for 2010/11 at £10,100.
Value Added Tax
The standard rate of VAT will be increased to 20% from 4 January 2011. There are no changes to the classification of supplies. The flat rate scheme limit and percentages will be recalculated.
Corporation tax
The main rate of corporation tax is to be reduced from 28% to 24% by 1% per annum over the next four years from 2011.
The small companies' rates of corporation tax will be reduced from 21% to 20%. The relevant profit limits for the small and marginal rates are unaltered (The small rate is applied to profits below £300,000 per annum).
A bank levy will be charged on bank balance sheets from 1 January 2011.
Capital allowances
The Annual Investment Allowance (AIA) will be reduced from to £25,000 p.a. for expenditure incurred on or after April 2012 for companies (It is currently £100,000 but was £50,000 up to April 2010).
Writing down allowances will be reduced from 20% to 18% for plant and machinery expenditure and from 10% to 8% for the “special rate pool” with effect from 2012.
Anti-avoidance and other measure
Government has restated its pledge to review the taxation of small business and IR35; details will be released shortly (haven’t we heard that somewhere before!)..
No announcements have been made on the status of proposals made by the previous government in connection with questionable Self-Employment in the construction industry or income shifting (first announced in the 2008 Budget).
The inheritance tax allowance is to be continued at its 2010-11 level of £325,000.
Whilst every effort has been made to make this newsletter accurate none of its contents should be relied upon and any specific actions you propose to take in relation to these matters should be checked with your Accountants beforehand – Hope Shaw Limited 01935 815700
For
other fact sheets Email: info@hopeshaw.co.uk
