Once again the Budget announced items which will affect forthcoming tax years, whilst items already announced in previous Budgets will be coming into effect in April 2011 such as the 1% increase in National Insurance rates, changes in National Insurance and Income Tax thresholds and new regimes for tax relief and annuities in respect of pensions.
The business community benefits most from the measures announced. An additional reduction in the main rate of Corporation Tax together with other measures to free up the company tax regime are intended to encourage business growth in the hope that this will increase employment and stimulate investment. Of more concern to local companies, however, were the cuts in the rates for capital allowances for investment in plant and machinery.
Entrepreneurs’ Relief will be doubled to £10 million to benefit those disposing of qualifying businesses for capital gains tax purposes.
There was good news for the charity sector in the proposed changes to Gift Aid with proposals that the formalities will be reduced for smaller charitable donations, although there was no extension to the transitional rebate following the change in basic rate tax previously.
The incentive to leave up to 10% of your estate to charity whilst a change to the rate of inheritance tax on the remainder means that your legacy to the other beneficiaries is not affected sounds promising but we will have to wait until we can study the detail of this to be sure that it will have the intended effect.
The headline measure was the reduction in fuel duty. The reality, however, is that oil prices show little sign of reducing in the short term and we will no doubt be paying more per litre soon even with the duty decrease.
Given current fuel prices, there was a welcome increase in the tax free limit of 45 pence per mile (first 10,000 business miles per annum) for people using their own car for business purposes, and don’t forget the additional 5p where an employee passenger is carried. The 5p has also been extended to volunteer passengers for charities.
Possibly the most interesting announcement was that there will be a consultation on integrating income tax and national insurance contributions. A daunting task!
If you have any questions about the Budget and how it affects you or your business then do talk to us by calling 01872 276116
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