The Chancellor has announced today the Coalition Government’s first Budget.
This is not intended as an in-depth analysis of the Budget speech (we will leave that to the real experts) but we hope this quick snapshot helps you gain a quick grasp on the key points:
Tax
VAT to increase to 20% from 4 January. Current zero-rated items to remain exempt for whole of current Parliament.
CGT to increase for higher-rate taxpayers to 28% from 23 June 2010. CGT to remain 18% for basic-rate taxpayers and the CGT tax-free allowance to remain £10,100 this year.
The CGT entrepreneurs rate of 10% to be extended to the first £5 million of lifetime gains.
Personal income tax allowance to be increased by £1,000 in April 2011 to £7,475. Higher rate threshold to remain frozen until 2013.
The April 2011 introduction of taper on higher rate tax relief on pension contributions by high earners to be reviewed.
Insurance premium tax to be increased from 2011. Higher rate to be 20%, standard rate 6%.
Councils that propose low council tax increases to be offered additional funds to allow them to freeze the tax for one year from April 2011.
State benefits and pensions
Benefits, tax credits and public service pensions to be increased in line with CPI rather than RPI from 2011.
Basic state pension to be linked to earnings from April 2011.
Pensions guaranteed to rise in line with earnings, prices or 2.5%, whichever is greatest.
The increase in the state pension age to 66 to be accelerated.
Child benefit to be frozen over the next three years.
Tax credits to be reduced for families earning over £40,000 from 2011.
Child element of the child tax credit to be increased by £150 above indexation in 2011.
Sure start maternity grant to go to the first child only.
Cap on housing benefit to be introduced - from £280 a week for a one-bedroom property to £400 a week for four bedrooms or larger.
Medical assessment for Disability Living Allowance to be introduced from 2013 for new and existing claimants.
Businesses
Corporation tax to be cut to 27% in 2011 and by 1% a year over the following three years to 24%.
Small companies rate to be cut to 20% in 2011.
Employer’s NI threshold to increase by £21 a week above indexation in April 2011.
Tax relief for video games industry to be scrapped.
Bank levy to be introduced in January 2011 to apply to balance sheets of UK banks and building societies and UK operations of foreign banks.
Duties
No increases in fuel, alcohol and tobacco duties.
Planned increase to duty on cider by 10% above inflation reversed.
Public sector pay
Two year public sector pay freeze to be introduced on staff earning more than £21,000.
People earning less than £21,000 to receive a flat pay rise worth £250 in each of the two years.
Internet
Planned landline tax to be scrapped.
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Tuesday, 22 June 2010
Tuesday, 18 May 2010
The Coalition Government making its presence felt
An increase in capital gains tax (CGT) will be at the heart of any package of reforms. Currently, at a rate of 18% on "non-business assets", this is likely to increase to close to 40%.
The income tax threshold is likely to rise to £10,000 from April 2011, with plans to ditch the employee part of the proposed National Insurance increases.
The £1 million threshold on inheritance tax was always unlikely, while the Lib Dems have had to give up on their "mansion tax" on properties worth more than £2 million.
Public sector pensions are to come under scrutiny, with a commission to assess their sustainability.
Victims of the Equitable Life scandal in 2000 will benefit from a new compensation scheme that goes beyond that devised by the Labour government.
The income tax threshold is likely to rise to £10,000 from April 2011, with plans to ditch the employee part of the proposed National Insurance increases.
The £1 million threshold on inheritance tax was always unlikely, while the Lib Dems have had to give up on their "mansion tax" on properties worth more than £2 million.
Public sector pensions are to come under scrutiny, with a commission to assess their sustainability.
Victims of the Equitable Life scandal in 2000 will benefit from a new compensation scheme that goes beyond that devised by the Labour government.
Tuesday, 27 April 2010
Save thousands with salary sacrifice
High earners should exploit salary sacrifice rules when planning their pension saving, allowing them to avoid some of the tax rises imposed by the Budget and pre-Budget report.
In brief, from 6th April a 50% upper rate of tax has been introduced for income over £150,000, and the personal allowance (the first slice of income on which no income tax is due) is also to be gradually removed. Currently staning at £6,475, this allowance will reduce and completely disappears for those earning approximately £113,000 or more. From 6th April 2011, National Insurance contributions will also increase by 1%, both for employees and employers.
These rises coincide with a wider range of changes that will make pension saving less tax efficient for those with high incomes. For the moment, those with incomes of more than £130,000 are to be hit, but are the government just lining up for further changes?
These changes make the option of salary sacrifice, where people give up some of their salary in return for an employer pension contribution, more attractive.
In brief, from 6th April a 50% upper rate of tax has been introduced for income over £150,000, and the personal allowance (the first slice of income on which no income tax is due) is also to be gradually removed. Currently staning at £6,475, this allowance will reduce and completely disappears for those earning approximately £113,000 or more. From 6th April 2011, National Insurance contributions will also increase by 1%, both for employees and employers.
These rises coincide with a wider range of changes that will make pension saving less tax efficient for those with high incomes. For the moment, those with incomes of more than £130,000 are to be hit, but are the government just lining up for further changes?
These changes make the option of salary sacrifice, where people give up some of their salary in return for an employer pension contribution, more attractive.
Tuesday, 30 March 2010
So what does the budget mean for you?
A VERY brief summary of budgetary announcements made last week, and also a reminder of those already made that will take effect from 6th April:
- income tax personal allowances remain unchanged for 2010/11
- the National Insurance Lower Earnings Limit will be increased from £95 to £97
- a reminder that for those with adjusted net income over £100,000, their personal allowance will be reduced by £1 for every £2 over the limit
- a new tax rate of 50% will be applied on those earnings over £150,000
- for dividend income, the new tax rates will be 10%, 32.5% and 42.5%
- the ISA limit will increase to £10,200 from 6th April 2010, of which a maximum of £5,100 may be invested to a cash account
- from 6th April 2011 the higher rate of tax relief on pension contributions will be restricted for those with gross income over £150,000. Anti-forestalling rules apply in the interim
- consideration is being made for removing the dafault retirement age of 65, although no changes will come into place before April 2011
- inheritance tax thresholds will remain frozen at £325,000 until the end of tax year 2014/15, scrapping previously announced increases to the threshold
- first time buyers will pay no stamp duty on properties worth less than £250,000
- stamp duty on properties over £1,000,000 will increase from 4% to 5%
- to encourage greater financial inclusion, more people are to be given access to setting up bank accounts
- legislation is being introduced to provide for larger penalties for taxpayers failing to provide a full account of their income and capital gains relating to offshore investments
- capital gains tax will remain at 18%, with the annual exemption being frozen at £10,100 for 2010/11
- income tax personal allowances remain unchanged for 2010/11
- the National Insurance Lower Earnings Limit will be increased from £95 to £97
- a reminder that for those with adjusted net income over £100,000, their personal allowance will be reduced by £1 for every £2 over the limit
- a new tax rate of 50% will be applied on those earnings over £150,000
- for dividend income, the new tax rates will be 10%, 32.5% and 42.5%
- the ISA limit will increase to £10,200 from 6th April 2010, of which a maximum of £5,100 may be invested to a cash account
- from 6th April 2011 the higher rate of tax relief on pension contributions will be restricted for those with gross income over £150,000. Anti-forestalling rules apply in the interim
- consideration is being made for removing the dafault retirement age of 65, although no changes will come into place before April 2011
- inheritance tax thresholds will remain frozen at £325,000 until the end of tax year 2014/15, scrapping previously announced increases to the threshold
- first time buyers will pay no stamp duty on properties worth less than £250,000
- stamp duty on properties over £1,000,000 will increase from 4% to 5%
- to encourage greater financial inclusion, more people are to be given access to setting up bank accounts
- legislation is being introduced to provide for larger penalties for taxpayers failing to provide a full account of their income and capital gains relating to offshore investments
- capital gains tax will remain at 18%, with the annual exemption being frozen at £10,100 for 2010/11
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