New budget is announced in the month of June 2010 which will affect almost all corners of life in UK. The summary is given below:
Personal allowance is to increase to £7,475 from April 2011.
Capital Gains Tax
For low and middle income earners, the capital gains tax is 18% but for the higher income tax rates, the CGT will become 28% in the future. However, the annual allowance of £10,100 is also present for all the capital gains.
From 4 January 2011, the main VAT is to rise from 17.5% to 20%.
From 1st April 2011, the corporation tax rate will be reduced from 28% to 27%. In the next year on 1st April 2012, the rate further reduces to 26%, on April 2013 it becomes 25% and finally on 1 April 2014 it goes to 24%. On the other hand for small companies the corporation tax rate becomes 20% from 1st April 2011.
From April 2012, for the main pool of plant and machinery, the writing down allowance rate will be reduced from 20% to 18% and for the special pool the rate changes from 10% to 8%.
Annual Investment allowance reduces from £100,000 to £25,000 from 1st April 2012. And for new zero emission goods vehicles, the 100% first year allowance is introduced which is applicable for the five year from April 2010.
Employers’ national insurance
A scheme in future will be introduced for new businesses based in the areas outside the south east of England which makes them exempt for up to £5,000 of employers national insurance contributions for each of the first ten employees hired in their first year of business.
The employers’ national insurance contributions secondary threshold will be raised by £21 per week above the indexation in April 2011.
Research and development tax (R&D) relief
For the R& D expenditure incurred after 9 December 2009, this is no longer required for SME to possess any intellectual property arising from R&D to qualify for enhanced tax reliefs.
The Chancellor has announced that the government will review taxation of non-domiciled individuals.
1) Child Benefit rates will stay at the same level for three years from April 2011.
2) No child tax credit available for families earning more than £40k per annum from April 2011 but on the other hand low income families will get more Child Tax Credit as per child it raises by £150 above the inflation rate next year.
3) Housing benefit: New limit of £400 a week for properties more than three bedrooms, for one bedroom flat the limit is £250 a week, for two bedroom property the limit is £290 and for three bed room flat the limit is 340.
4) Unemployed people see 10% cut in their Housing Benefit after 12 months of claiming Jobseekers Allowance from April 2013.
5) There is also a cut for people of working age who are in larger homes than their family size but from April 2011 disabled people could be able to claim for an extra bedroom those who do not have a resident carer.
6) From April 2011 the Health in pregnancy grant will be abolished and the Sure Start maternity grant will be restricted to the first child.
7) Lone parents need to look for work once their youngest child goes to school.
8) Government in future introduces a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.
9) From 2011 benefits, tax credits and public service pensions all will rise in line with the Consumer Price Index except the state pension and pension credits.