The latest budget means a number of key changes which may affect both you personally and your business…

The Chancellor of the Exchequer, George Osborne, announced his budget on 23rd March 2011. Below is a list of the key changes and how they may affect you personally and your business.

Tax Changes…

Income Tax

o – The personal allowance for people aged under 65 will increase by £630 to £8,105 in April 2012. This is the amount of income you can receive without paying tax on it.

o – The basic rate limit will fall by £630, taking it from £35,000 in 2011-12 to £34,370 in 2012-13. This means the higher rate threshold (the personal allowance plus the basic rate limit) will not be affected. No additional higher rate taxpayers will be created through this, and most basic and higher rate taxpayers will gain from the increase in personal allowances by the same amount.

Inheritance Tax

o – Inheritance Tax will be reduced by 10 per cent if you leave 10 per cent or more of your estate to charity.

Corporation Tax

o – The main rate of Corporation Tax will be cut to 26% from April 2011 and reduced by 1% for the next three years until it reaches 23% in 2014/15.

Motoring and Travel…

For motorists who are required to use their own vehicle for work, the Approved Mileage Allowance Payments (AMAPs) rate will rise to:
o – 45 pence per mile for the first 10,000 miles (up from 40 pence a mile)
o – 25 pence per mile thereafter

Pensions…

The Chancellor has proposed to simplify the State Pension system into a new flat-rate pension based on contributions. The new system is estimated to be worth around £140 per week. The new system will not apply to current pensioners.

Savings…

The ISA limit for 2011/12 has increased to £10,680 of which £5,340 is the cash element.

Tax advantage savings accounts will be made available from Autumn 2011 for children under 18 who do not have a child trust fund; this will be in the form of a Junior ISA.