Income tax – the personal allowance will rise by £1000 to £7475 on 6.4.11. The basic rate limit will be reduced so that higher rate taxpayers will not benefit.
Corporation tax – the small companies rate (first £300k of profit) will reduce by 1% to 20% on 1.4.11.
VAT – the standard rate rises to 20% on 4.1.11. If you are planning a major purchase and unable to re-claim vat, it would make sense to beat the deadline.
National Insurance – the main N.I. rates will rise by 1% on 6.4.11 as previously announced.
Capital gains tax – from 23.6.10, the flat rate of 18% stays the same for basic rate taxpayers, but increases to 28% for higher rate taxpayers. The annual exempt amount will remain at £10100. The entrepreneurs limit for lifetime gains (at 10% tax) increases from £2m to £5m from 23.6.10.
Capital allowances – the 100% tax relief in year one will be reduced from £100k to £25k from April 2012 (excludes cars). The normal allowance will be reduced from 20% to 18% at the same time.
Summary – at April 2011, with corporation tax reducing by 1% and National Insurance increasing by 1%, it becomes more attractive to operate as a Limited Company. Please contact us to discuss further.
In HMRC’s vat notes 1 of 2010, they state that from 1.4.10 they will consider payments by cheque as received on the date the payment reaches HMRC’s bank account. Previously they treated them as received on the date the cheque arrived. Obviously they are pushing businesses to pay electronically.
The new government will be announcing an emergency budget on June 22nd. We will update you on the implications through this page as soon as possible after that date.
In the past GP’s have stated that “you should refrain from work” or “you need not refrain from work”. From 6.4.10 GP’s have another option, “may be fit for work taking account of the following advice”. They then have 4 further options; a phased return to work, flexible working, amended duties or workplace adaptations. For more information see www.dwp.gov.uk/fitnote.
1. Limited Company owners with high earnings should consider taking a dividend in the 2009/10 tax year instead of the 2010/11 tax year to avoid tax rates above 40%. In 2010/11, consider pension contributions to bring you below the high rate tax thresholds.
2. When replacing your car, seriously consider a lower CO2 emission vehicle. If you are running a Limited Company, we normally advise you to keep the car outside the Company but to charge the Company for business miles. Vans however should normally be put through the Company.
Income tax – the personal allowance remains at £6475 (£124.52 per week). The next £37400 will be taxed at 20%; then 40% for income between £43875 and £100000. Above £100000, the personal allowance will reduce by £1 for each £2 of income, creating an effective 60% tax rate on earnings between £100000 and £112950. At £150000, income tax increases to 50%. The personal allowance for 65-74’s remains at £9490, and for age 75 and over it remains at £9640.
Corporation tax – the small companies rate (first £300k of profit) remains at 21% for the year commencing 1.4.10.
National Insurance – self employment – class 2’s remain at £2.40 per week, class 4’s are 8% of profits between £5715 and £43875, and 1% above £43875. For employees – 11% of earnings between £110 and £844 per week, and 1% above £844. Employers – 12.8% on all earnings above £110 per week.
VAT – registration limit increases from £68000 to £70000 from 1.4.10.
Capital allowances – the first £100k of capital expenditure excluding cars in 2010/11 will qualify for 100% tax relief in year one. Cars – as last year, allowances depend on their CO2 emissions – 100% if not more than 110g/km, 20% for 110 to 160g/km, 10% if over 160g/km. Vans are 100% providing that the value falls within the annual £100k allowance.
Capital gains tax – the annual allowance for individuals ( not companies) remains at £10100. The 18% flat rate of tax continues into 2010/11. The entrepreneurs limit for lifetime gains (at 10% tax) increases from £1m to £2m.
Inheritance tax – the nil rate band remains at £325000 for 2010/11 (£650000 for married couples and civil partners).
Furnished holiday lettings – the special rules which allowed losses to be offset against other income will be withdrawn from 6.4.10.
Just a quick reminder that the VAT rate will return to 17.5% on 1st January 2010.
If you are unsure how this affects you please contact us or visit the HMRC website (see our links page).
28th June , 2010 
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