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.

11.1 Personal Pensions

From 6th April 2011, the maximum level of gross contributions for which a pension provision may be made with tax relief is now £50,000 per annum.

The lifetime allowance for total tax-approved pension savings reduces from £1,800,000 in 2010/11 to £1,500,000 in 2012/13.

From April 2011 the requirement for pensioners to annuitise their pension by the age of 75 will be removed.

11.2 Stamp Duty Land Tax

Anti avoidance legislation will be introduced from 2011/12 to mitigate against certain Stamp Duty Land Tax schemes.

A new 5% rate is introduced for residential properties worth more than £1 million from 6th April 2011.

First time home buyers will pay no stamp duty on properties worth up to £250,000 until 24th March 2012.

11.3 Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT)

The annual investment limit for EIS is increased to £1 million for individuals from 2011/12, with the income tax relief increased to 30% from 20%.

The conditions for a company to qualify are changed to increase the minimum number of employees from 50 to 250 and the gross assets of the company from £7 million to £15 million.

The maximum amount that can be invested into one company during a year is also increased from £2 million to £10 million.

11.4 ISAs

From 2011/12 the maximum limit of investment is increased from £10,200 to £10,680, of which £5,340 can be invested in cash.

Junior ISAs should be available from autumn 2011 for UK resident children who do not have a child trust fund.

11.5 Employer Supported Childcare

Employees can continue to receive up to £55 a week with an approved childcarer, free of tax and National Insurance. The requirement for employer supported childcare to be made available to all employees in order to qualify, is withdrawn.

From 6th April 2011 those joining a scheme will have the level of income tax relief restricted to the basic rate of tax. This will be achieved by introducing new income tax exempt limits of £28 per week for higher rate taxpayers and £22 per week for additional rate taxpayers.

11.6 Pensioners

The basic state pension is increased by 4.6% to £102.15 per week.

The state pension age will rise to 66 by 2020.

The tax free winter fuel allowance remains at £250 per household for those aged over 60 (rising to 65 incrementally between 2010 and 2020 in line with the increase in women’s state pension age) and £400 for those aged over 80.

The first £10,000 of savings held by pensioners is disregarded when assessing their entitlement to Pension Credit, Housing and Council Tax Benefit.

11.7 Residence Status

There will be the introduction of a statutory test for residence from April 2012.

11.8 Non Domicile Status

There will be a consultation this year to consider an increase to the £30,000 annual charge to £50,000 for non domiciled individuals who have been UK resident for 12 or more years. The £30,000 charge shall be retained for those resident between 7 and 12 years.

The tax charge will be removed when income or gains are remitted to the UK for UK commercial investments.

11.9 Charities

From April 2011 the maximum value of benefits that individuals and companies may receive for making a donation to charity of more than £10,000 will be increased from £500 to £2,500. This is still subject to a limit of 5% of the gift made.

Charities will only receive Gift Aid of 20/80ths [25%] of donations made after 5th April 2011 (reduced from 22/78ths [28.2%]).

From April 2013 charities and clubs that receive small donations of £10 or less will be able to claim a gift aid style repayment without obtaining gift aid declarations. This will be capped at £5,000 per annum.

Online filing will be introduced from 2012/13 for gift aid claims.

11.10 Child Tax Credit

The Child Tax Credit (CTC) is based on joint incomes. The full child element payment is increased from £2,300 to £2,555 and is received directly from HMRC. The income threshold for those entitled to CTC only but not Working Tax Credits (WTC), is reduced to £15,860. The income threshold for CTC family element is decreased from £50,000 to £40,000, reducing for joint incomes up to about £41,300. The family element remains frozen at £545 per year. The further payment given in the year of a child's birth has been removed. Claims must be made separately from Tax Returns. If income increases by more than £10,000 or personal circumstances change, then HMRC must be informed within 1 month in accordance with the notes sent with Award notices.