23rd March 2011 BUDGET PROPOSALS
AND CHANGES FOR 2011/2012 previously announced
(Subject to details in the Finance Bill)
Ellis Atkins have taken all due care in the presentation of these notes. No responsibility for loss occasioned to any person or company acting or refraining from action as a result of any material in these notes can be accepted by Ellis Atkins, its partners or staff. Please contact us or your own professional advisor for advice specific to your circumstances.

1.1 The basic rate remains at 20%.

1.2 The higher rate remains at 40%, with the threshold reduced to £35,000. This reduction sets off the tax savings due to the increase to the personal allowance for higher rate taxpayers.

1.3 The additional rate of 50% for taxable income above £150,000 remains unchanged, but has been highlighted as being a temporary measure.

1.4 The tax rate for investment income (other than dividends) remains at 20%, but the 10% lower rate band is available for savings income only, up to a limit of £2,560, if not already utilised by earned income and pensions. The higher rate and additional rate for savings are at 40% and 50% of the grossed up income.

1.5 The tax credit on dividends remains at 10% and this is not repayable..

As before, no additional tax is payable where taxable income is below the higher rate threshold. The higher rate on dividends remains at 32.5% of the grossed up income (equivalent to 25% of the net dividend). From 2010/2011 the additional rate on dividends will be at 42.5% of the grossed up income (equivalent to 36.11% of the net dividend) for taxable income above £150,000.

The single person personal allowance will be increased to £8,105 from 2012/13. The higher rate threshold will be reduced by £630 to £34,370 to accommodate the increased personal allowance.

The age allowances abate by £1 for every £2 of income over £24,000 until they are reduced to the basic allowances. This level is reached at incomes from £28,930 for single people aged 65 to 74 to £38,220 for married people aged 75 and over.

The basic personal allowance for individuals will be reduced by £1 for every £2 above an adjusted net income above £100,000. The personal allowance will be reduced to nil for incomes of £114,950 and above.

1.7 Car and fuel benefits

The system of car and fuel benefits based on the level of carbon dioxide emissions continues. From 2011/12 the 35% maximum percentage of the list price of a car when new (no longer capped at £80,000), is reached at 225 g/km.

Qualifying low emissions cars (cars with CO2 emissions of 120g/km or less) are assessed at 10% of the list price for petrol cars and 13% for diesel.

The 2% discount for cars manufactured to run on E85 bio fuel is abolished from April 2011.

Cars propelled solely by electricity will have the rate reduced from 9% to 0%. This measure will run for 4 years.

The figure used as the basis for calculating the benefit of private fuel received for a company car is increased from £18,000 to £18,800 from 2011/12.

1.8 Van benefits

As before, there is no benefit charge for employer provided vans that have insignificant or no private use.

The benefit charge for unrestricted private use of employer provided vans remains at £3,000, with an additional £550 if the employer also provides fuel for private use (increased from £500).

1.9 Authorised Mileage Rates

The single authorised rate for all vehicles for business use of employees' own vehicles is increased to 45p for the first 10,000 miles and 25p thereafter for cars, 24p for all miles for motorcycles and 20p for bicycles.

1.10 From 2007/08 tax returns for individuals, trusts and partnerships had two separate filing deadline dates. Paper returns must be filed by 31st October and returns filed online by 31st January. For tax returns for the year ended 5th April 2011 a £100 fixed penalty will be imposed for the late submission of returns, regardless of the level of tax liability.