Budget 2011 – Wide ranging tax changes
George Osborne introduced his second Budget with the aim of fiscal neutrality and making the UK the most competitive place to start, grow and finance a business. The Budget highlights include a wide range of measures.
The Government is aiming to simplify the tax system and will consult on the integration of income tax and national insurance contributions. There is also to be a bonfire of tax reliefs including for example, abolition of tax freedom for Tax Reserve Certificate interest. Late night taxis will no longer be tax free, breakfast on cycle to work days will be taxable and life assurance premium relief is to go.
Enterprise investment schemes (EISs) and venture capital trusts (VCTs) will be reformed, increasing the rate of tax relief on EISs to 30%, increasing the investment limit to £1m from April 2012 and raising the company qualifying limits.
The rate of corporation tax will be cut by an extra 1% to 26% from this April, with the small profits rate reduced to 20%. The small business rate relief holiday will be extended to 1 October 2012. The rate of R&D tax credit for small and medium-sized enterprises (SMEs) will be increased to 200% from this April and to 225% from April 2012 and some of the restrictions will be removed. The lifetime limit on capital gains that qualify for entrepreneurs’ relief (a 10% tax rate on gains) will rise to £10m from 6 April 2011.
‘Non-doms’ are to be targeted again, but are then to be given some stability of treatment. There will be an increase in the annual charge for non-domiciled individuals who have been resident in the UK for over 12 years from April 2012. There will be other changes to the taxation of ‘non-doms’ and the definition of residence will be put on a statutory basis.
Charities are to benefit from a range of reforms to their tax position, including simplification of gift aid and a special new inheritance tax relief for gifts to charity.
There is the usual raft of anti-avoidance measures – but this year, they are even more plentiful than normal and there is a special anti-avoidance strategy paper.
For a full summary of the Chancellor’s Budget speech click here.
