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Budget Summary 2011
The personal allowance for 2011/12
For those aged under 65 the personal allowance will be increased by £1,000, from £6,475 to £7,475 for 2011/12.
Tax bands and rates for 2011/12
The basic rate limit will be reduced from the current £37,400 to £35,000. Therefore an individual will pay 40% tax rather than the basic rate of 20% when their total income exceeds £42,475.
The 50% rate of income tax (the 'additional rate') will continue for 2011/12. This applies to taxable income above £150,000.
National Insurance Contributions (NICs)
From 6 April 2011 a further 1% will apply to the rates applicable to employers, employees and the self-employed, from 11% to 12% for employees and from 12.8% to 13.8% for employer’s contributions.
Corporation Tax Rates
The small profits rate of corporation tax, which generally applies to companies with up to £300,000 of profits, is to reduce from 21% to 20% also with effect from 1 April 2011.
The effective marginal corporation tax rate for profits between £300,000 and £1.5 million will be 27.5% from 1 April 2011.
Approved mileage allowance payments (AMAP)
The AMAP rates can be used to claim the cost of business mileage in an employee's own vehicle. The rates cover cars, vans, motorcycles and bicycles. Where an employer pays less than the published rates, employees can make a claim for tax relief for the shortfall.
With effect from 6 April 2011 the rate of the AMAP for cars and vans will be increased from 40p per mile to 45p per mile for the first 10,000 miles of business travel in the tax year. The rate for mileage above 10,000 miles will remain at 25p per mile.
VAT
As you are no doubt aware the standard rate of VAT has increase from 17.5% to 20% from 4 January 2011. The reduced rate of 5% and the zero rate remains unchanged.
