Income tax – the personal allowance increases to £7475 (£143.75 per week). The next £35000 will be taxed at 20%; then 40% for income between £42475 and £100000. Above £100000, the personal allowance will reduce by £1 for each £2 of income. At £150000, income tax increases to 50%. The personal allowance for 65-74’s increases to £9940, and for age 75 and over it increases to £10090.
Corporation tax – the small companies rate (first £300k of profit) reduces to 20% from 1.4.11. The large companies rate (profits over £300k) reduces from 28% to 26% from 1.4.11.
National Insurance – self-employment – class 2’s increase to £2.50 per week, class 4’s increase to 9% of profits of profits between £7225 and £42475, and 2% above £42475. For employees, 12% of earnings between £7225 (£139 per week) and £42475 (£817 per week), and 2% above £42475. For employers, 13.8% on all earnings above £7075 (£136 per week).
VAT – the registration limit increases from £70000 to £73000 from 1.4.11.
Capital allowances – the Annual Investment Allowance (excludes cars) reduces from £100k to £25k from April 2012. It would therefore be wise to purchase any large items before April 2012. Also at April 2012, writing down allowances reduce from 20% to 18%.
Capital gains tax – the annual allowance for individuals (not companies) increases to £10600. CGT rates are 18% ( or 28% if the gain takes you above the £42475 threshold). The sale of businesses benefit from a lower 10% CGT rate (Entrepreneurs relief) for the first £10 million of lifetime gains.
Inheritance tax – the nil rate band of £325000 (£650000 for married couples and civil partners) is frozen until April 2015.
Small business rate relief – the SBBR will be extended by 1 year from October 2011. There will also be 21 new enterprise zones which will attract 100% discount on rates.
Furnished holiday lettings – from April 2011, losses can only be offset against future profits from the same FHL business.
Directors of owner managed companies – please note that with the increase in personal allowance and the corresponding reduction in the 40% tax threshold to £42475 from April 2011, the amount of dividends available without going into high rate tax is reduced.
Business mileage rates – from 6.4.11 the tax free rates are 45p ( up from 40p) for the first 10000 business miles, and 25p on miles in excess of 10000.
ISAS – for 2011/12, the annual limit is increased to £10680 (cash element £5340).
As always, please contact us if you wish to discuss your personal situation.
