Key changes already announced to take effect from 6 April 2011, include:
- Personal allowance to rise to £7,475
- Main rate of employees’ NIC increasing from 11% to 12% for those earning over approx £7,225
- Reduction to the higher income tax rate threshold (to £42,475 )
- Increase in NI rate from 1% to 2% for those earning over approx £42,475
- Reduction in tax privileged pension contributions (down from £255,000 to £50,000pa)
- Reductions to corporation tax rates
- Restrictions to the special regime for furnished holiday lettings
- More targeted anti-avoidance rules
Key changes already announced to take effect from 6 April 2012:
- Restrictions to capital allowances
Main announcements due on Budget day, with changes which take effect from April 2011. Details yet to be confirmed:
- ‘Modernisation’ of corporate tax system
- Changes to ‘disguised remuneration’
- CGT annual exemption for 2011/12 – likely to be in line with inflation and expected to be approx £10,600
Further announcement, likely to take effect from 6 April 2012:
- Increase in personal allowance, rumoured to be £8,000. (If increased in line with inflation of, say, 3%, the new threshold would be £7,700.)
Consultations
A raft of consultations is also expected to be announced on Budget day, with a view to introducing changes in April 2012 or after. Consultations likely to cover:
- Merger of income tax and NIC
- Employee Benefits – to align their treatment, simplifying many minor benefits with a de minimis limit
- Overhaul of IHT and the taxation of trusts, rather than tinkering with reliefs
- CGT, in particular the growing difference between the regimes for individuals and companies
- Principal private residence and CGT relief
- Simplification of EIS, VCT, entrepreneurs’ relief, enhanced capital allowances for energy and water efficient technologies, purchase of own shares, demergers. This broad ranging consultation, coupled with potential simplification of tax situation for micro-businesses, is enabling the Chancellor to label the Budget as ‘A Budget for enterprise and growth’.
- Abolition of 45 out-dated reliefs, including late night taxis, provision of meals for cycle to work days, 15p per day luncheon vouchers, miners’ free coal, flat conversion allowance, blind person’s allowance
- Changes to non-dom regime
The above does not cover every detail but is intended as an overview of key areas to be included in the Budget.
Press office:
Kate Harrison - 020 7131 4228 / 078019 68377
Matt Rowe - 020 7131 4550
