Click here to read our Budget summary which focuses on the issues likely to affect you, your family and your business.
The main Budget proposals are:
Capital Gains Tax
- Capital gains tax increased to 28% with effect from 23 June 2010 for higher rate and top rate taxpayers. The rates may change again from 6 April 2011.
- Trustees and personal representatives subject to the new 28% rate.
- The lifetime limit for Entrepreneurs' Relief which is available for disposals of business assets to be extended to £5 million for disposals on or after 23 June 2010. A CGT rate of 10% will apply to gains qualifying for this relief.
- Annual exemption kept at £10,100 per annum for 2010/11.
Business Taxation
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The main corporation tax rates to decrease over 4 years:
2011/12 - 27%, 2012/13 – 26%, 2013/14 – 25%, 2014/15 - 24%. - Small companies’ rate to decrease from 21% to 20% from 1 April 2011.
- Thresholds for corporation tax main rate and small companies rates to remain unchanged.
- Capital allowances to be reduced in April 2012 from 20% to 18% for the main rate pool and from 10% to 8% for special rate pools.
- Annual Investment Allowance on plant and machinery to be reduced from £100,000 to £25,000 from April 2012.
- The thresholds at which employers pay national insurance contributions to be increased by £21 per week.
- Targeted employer national insurance incentives for regional (non South Eastern) businesses.
- The previously proposed video games relief not to be introduced.
Indirect Taxation
- VAT increased to 20% with effect from 4 January 2011.
- Insurance premium tax rates increased from 17.5% to 20% and from 5% to 6%.
Personal Taxation
- Personal allowances increased by £1,000 to £7,475 with effect from 6 April 2011. Only basic rate taxpayers will benefit from the increase.
- Review, and possible repeal, of the complex new rules for pension contributions due to come into effect on 6 April 2011. Possibility of reducing the current £255,000 annual allowance to a level between £30,000 and £45,000. In the meantime the existing anti-forestalling provisions will remain in place.
- Furnished holidays lettings rules will be retained (for now); however this is subject to a review in the summer.
- Another review of the taxation of non-domiciled individuals has been announced.
General Anti Avoidance Rule
- A review of whether a General Anti-Avoidance Rule (GAAR) should be enacted.
This Budget report is for guidance only. Before implementing any strategy that might affect your financial and tax affairs, please speak to your contact partner.