On 22nd June 2010, the Chancellor delivered the first Budget of this Coalition Government with the express purpose of dealing with our country’s massive debt. We had been warned about massive spending cuts and tax increases, which went some way to softening the public reaction.
A summary of the main changes, both good and bad are detailed below:
• Duty – No change in duties on fuel, alcohol and tobacco.
• VAT – Increase to 20% effective from 4th January 2011.
• Income Tax – The basic rate and higher rate charge remain unchanged. An increase in personal allowances by £1,000 to £7,475 effective from 6th April 2011, to directly assist lower paid and basic rate payers, will be rendered ineffective for higher rate payers with an adjusted basic rate band limit (level to be advised September 2010).
• Capital Gains Tax – Higher rate tax payers will be subject to a charge of 28% on gains, with immediate effect, basic rate payers remain chargeable at 18%. Gains qualifying under the Entrepreneurs Relief remain charged at 10% and the lifetime gains limit is increased to £5 million.
• Corporate Tax – Main rate cut to 27% effective 1st April 2011 and further reductions to follow over three years. Small companies rate 20% from 1st April 2011.
• Capital Allowances – Reduction of allowance in main rate pool from 20% to 18% and special rate pool, to include the specifically defined “integral features” and certain cars from 10% to 8%.
• National Insurance Contributions – No significant changes, realignment of thresh holds and limits.
• Others –
o Various benefits including housing benefits, child benefit, tax credits and child trust funds have been frozen, restricted or abolished.
o Pensions annual allowance under review.
o NIC payment break for specific new businesses.
To find out more on how the Budget could affect your business, call the TaxWise Advice Service on 01455 852555.
The Budget: What It Means For Your Business
July 02 2010