Following yesterdays Budget, here are some of the relevant announcements including those to personal taxation, National Insurance and Capital Gains Tax.  Further information on each is available on request.

Income Tax

The threshold from April 2011 is £7,475, and will rise to £8,045 from April 2012.

The government will be consulting on the possible merger of NI and Income tax merger, which would create a new basic rate of income tax of 32%.

Other news on income tax that came out from the Budget included the suggestion that the 50p top rate of income tax was only a “temporary” measure. George Osborne told MPs it is right the wealthy pay more in tax, but at the same time admitted a permanent 50% tax could do “lasting damage” to Britain’s economy.

Following a report, Britain is 83rd out of 86 leading economies on the level of its top income tax rate, with only the Netherlands, Denmark and Sweden taxing high-earners more.

Capital Gains Tax

Entrepreneurs’ relief – Increase the lifetime limit from £5m to £10m with effect from 6 April 2011. Qualifying gains to be taxed at a rate of 10%.

CGT annual exemption – Increase to £10,600 with effect from 6 April 2011, and confirmation that the allowance will be uprated by CPI from April 2012.

ISA Allowances

The annual allowances will be uprated by CPI from April 2012.

Corporation Tax

The main rate of corporation tax is to reduce to 26% for the financial year from April 2011, and 25% for the financial year from April 2012.

The small profits rate of corporation tax is to reduce to 20% from the financial year from April 2011.

Inheritance Tax

Estates will benefit from a 10% discount in IHT if they leave part of the money to charity. IHT is currently charged at 40% on estates worth more than £325,000. The 10% discount is taken off of the current 40% tax rate, meaning an actual reduced tax rate of 36%.

State Pension

George Osborne has confirmed the implementation of a single tier state pension. He also said that the current system was “unbelievably complex” and adds the proposed system will be flat-rate and still based on contributions and likely to be worth £140 per week.

They are also aiming to increase state pension age to 66 by 2020 and 68 by 2048.

First Time Buyer Scheme

A £250m package to help first time buyers get onto the property ladder. It is designed to help buyers unable to save a deposit. It will be five-year interest-free loan of up to 80% of the deposit. Details to follow.

Fuel duty rise scrapped

The Chancellor has scrapped the planned rise in fuel duty, and will cut fuel duty by 1p a litre from 6pm tonight and introduce a “fair” fuel stabiliser.

The fuel duty escalator will be removed when oil prices are high and replaced with a fair fuel stabiliser.

Obviously this is only a very brief summary, but if you have any concerns about this and how it may affect you, then please contact me to discuss.

Shane Beardsley
Managing Director / Independent Financial Adviser

tel: 01482 658989
email: shane@kirkellainvestments.co.uk
web: www.kirkellainvestments.co.uk