Highlights from the March 2011 budget
- Mileage allowance has at long last been increased by 5p to 45 per mile for the first 10,000 miles in each tax year. Miles above this amount remain at 25p per mile.
- Employer and employee NIC contributions go up 1% in April, as announced in last year's
- Personal allowance, before any tax is paid, goes up £1000 this year, as per last year's budget. But this will be increased a further £630 in April 2012. However, the upper rate for 40% tax, will also be reduced by the same amount next year.
- Those earning more than £100,000 per year should be aware that tax free allowances are abated away, £1 for every £2 over this amount. Thus, someone earning £116,000 in 2012 will have no personal allowance.
- Corporation tax for small companines (under £150,000 profit) will reduce to 20% in April 2011. For larger companies, this will be 27% from April 2011 and 26% from 2012.
- The budget repeated the announcement that the amount of money that you can save in a pension, and get tax relief, will be reduced. Previously you could save up to £255,000 per annum, with a £1.8M lifetime limit. This has now been reduced to £50,000 per annum and a maximum of £1.5M.
- The Government has also announced that allowances, reliefs and thresholds will no longer be increased by the Retail Price Index (RPI), changing to the Consumer Price Index (CPI). This is expected to slow down the rate that these will increased.
- This budget has changed Entrepreneur's Relief. The last budget announced that gains upto £5m on the sale of your business would be eligible for 'entrepreneur's relief', reducing the rate to only 10% of the capital gain. This has now been increased to £10M.
- The 2011 Finance Act will allow the taxman to take 'security' for non-payment of PAYE. It means that if HMRC believe a business might go into liquidation or default on PAYE or NICs, they can demand that a specified sum of money be placed in a bank, requiring permission from HMRC before it is accessed.