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.
