MAIN INCOME TAX ALLOWANCES AND RELIEFS

	2010/11 £	2011/12 £
Personal allowance – standard	6,475	7,475
- Age 65 – 74	9,490	9,940
- Age 75 and over	9,640	10,090
Personal allowance reduced if total income exceeds ±	100,000	100,000
Married couple's allowance – minimum amount *	2,670	2,800
- Age 75 and over*	6,965	7,295
Age-related allowances reduced if total income exceeds ‡	22,900	24,000
Maintenance to former spouse †	2,670	2,800
Employment termination lump sum limit	30,000	30,000
± For 2011/12 the reduction is £1 for every £2 additional income over £100,000. As a result there is no personal allowance if total income exceeds £114,950 (£112,950 for 2010/11). * Relief at 10%. Minimum amount applies for age allowance purposes only. †Relief available at 10% only if at least one of the couple was born before 6 April 1935. ‡ For 2010/11 and 2011/12 the reduction is £1 for every £2 additional income over the total income threshold. Standard allowance(s) only are available if total income exceeds:-
	2010/11 £	2011/12 £
Taxpayer aged 65 - 74 [personal allowance]	28,930	28,930
Taxpayer aged 75 and over [personal allowance]	29,230	29,230
Taxpayer aged 75 and over [married couple's allowance]	37,820	38,220

INCOME TAX RATES

	2010/11 £	2011/12 £
Starting rate on savings income- 10%	1 – 2,440	1 – 2,560
Basic rate	20%	20%
Maximum tax at basic rate †	7,480	7,000
Higher rate - 40%	37,401-150,000	35,001-150,000
Tax on first £150,000 †	52,520	53,000
Additional rate – 50%	Over 150,000	Over 150,000
Discretionary and accumulation trusts (except dividends) ‡	50%	50%
Discretionary and accumulation trusts (dividends) ‡	42.5%	42.5%
Ordinary rate on dividends	10%	10%
Higher rate on dividends	32.5%	32.5%
Additional rate on dividends	42.5%	42.5%
† Assumes 10% band not available. £6,744 on first £35,000 (£7,236 on first £37,400 in 2010/11) and £52,744 (£52,276 in 2010/11) on first £150,000 if full 10% band is available. ‡ Up to the first £1,000 of gross income is generally taxed at the standard rate, ie. 20%, or 10% as appropriate.

CAR BENEFITS

The charge is based on a percentage of the car's “price”. “Price” for this purpose is the list price at the time the car was first registered plus the price of extras. For 2010/11 only this was capped at £80,000.

For cars first registered after 31 December 1997 the charge, based on the car's “price”, is graduated according to the level of the car's approved CO 2 emissions.

For petrol cars with an approved CO 2 emission figure

CO 2 g/km	% of price subject to tax		CO 2 g/km	% of price subject to tax		CO 2 g/km	% of price subject to tax
	2010/11	2011/12		2010/11	2011/12		2010/11	2011/12
75 or less	5	5	155-9	20	21	195-9	28	29
76-120	10	10	160-4	21	22	200-4	29	30
121-129	15	15	165-9	22	23	205-9	30	31
130-134	15	16	170-4	23	24	210-4	31	32
135-9	16	17	175-9	24	25	215-9	32	33
140-4	17	18	180-4	25	26	220-4	33	34
145-9	18	19	185-9	26	27	225-9	34	35
150-4	19	20	190-4	27	28	230-	35	35

Notes

• The exact CO 2 emissions figure should be rounded down to the nearest 5 g/km for levels of 125g/km or more (130g/km or more in 2010/11).
• For all diesels add 3%, subject to maximum charge of 35%. For 2010/11 no surcharge applied to diesels meeting Euro IV and registered on or before 31 December 2005.
• For 2010/11 only, hybrid petrol/electric cars are subject to a 3% reduction, with a minimum 10% charge.
• For 2010/11 only, LPG, dual LPG/petrol and E85 cars are subject to a 2% reduction, with a minimum 10% charge. Reduction does not apply to LPG conversions.
• There is no charge for any car which cannot produce CO 2 .

For cars with no approved CO 2 emissions figure, the charge is based on engine size.

Engine Size (cc)	Percentage of car's price charged to tax
0 – 1,400	15
1,401 – 2,000	25
2,001 and more	35

CAR FUEL BENEFITS

For cars with an approved CO 2 emission figure, the benefit is based on a flat amount of £18,800 (£18,000 for 2010/11). To calculate the amount of the benefit the percentage figure in the above car benefits table (that is from 10% to 35%) is multiplied by £18,800. The percentage figures allow for a diesel fuel surcharge. For example, in 2011/12 a petrol car emitting 162 g/km would give rise to a fuel benefit of 21% of £18,800 = £3,948.

VALUE ADDED TAX

From	1 April 2010	4 January 2011	1 April 2011
Standard rate	17.5%	20.0%	20.0%
Reduced rate (eg domestic fuel)	5.0%	5.0%	5.0%
Annual turnover limit for registration	£70,000	£70,000	£73,000
Deregistration threshold	£68,000	£68,000	£71,000
Flat rate scheme turnover limit	£150,000	£150,000	£150,000
Cash accounting and annual accounting limits	£1,350,000	£1,350,000	£1,350,000

INHERITANCE TAX

	Cumulative chargeable transfers [gross]		tax rate on death %	tax rate in lifetime* %
	2010/11 £	2011/12 £
Nil rate band**	325,000	325,000	0	0
Excess	No Limit	No Limit	40	20
* Chargeable lifetime transfers only ** On the death of a surviving spouse on or after 9 October 2007, their personal representatives may claim up to 100% of any unused proportion of the nil rate band of the first spouse to die (regardless of their date of death).

CAPITAL GAINS TAX

Main exemptions and reliefs

	2010/11 £	2011/12 £
Annual exemption	10,100*	10,600*
Principal private residence exemption	No limit	No limit
Chattels exemption	£6,000	£6,000
Entrepreneurs' relief	4 / 9 ths of business gain - lifetime limit £2,000,000 (to 22/6/2010). Lifetime limit £5,000,000 (from 23/6/2010)	Lifetime limit £10,000,000. Gains taxed at 10%
* Reduced by at least 50% for most trusts.

RATES OF TAX

Individuals: To 22/6/2010: 18%
From 23/6/2010: 18% on gains within basic rate band, 28% for gains in higher and additional rate bands
Trustees and personal representatives: To 22/6/2010: 18%
From 23/6/2010: 28%

STAMP DUTY AND STAMP DUTY LAND TAX

Residential	Commercial	Rate
£125,000* or less	£150,000 or less	Nil
Over £125,000* up to £250,000	Over £150,000 up to £250,000	1%
Over £250,000 up to £500,000	Over £250,000 up to £500,000	3%
Over £500,000 up to £1,000,000	Over £500,000	4%
Over £1,000,000	N/A	5%
*£250,000 for first-time buyers where completion is before 25/3/2012, £150,000 for property in disadvantaged areas
Stamp Duty (including SDRT): stocks and marketable securities		0.5%
No charge unless the duty exceeds £5

CORPORATION TAX

	Year Ending 31 March
	2011	2012
Main rate	28%	26%
Small profits rate *	21%	20%
Small profits limit *	£300,000	£300,000
Upper marginal level	£1,500,000	£1,500,000
Effective marginal rate	29.75%	27.5%
* Formerly the small companies' rate/limit

TAX-PRIVILEGED INVESTMENTS [ MAXIMUM INVESTMENT]

ISA	2010/11 £	2011/12 £
Overall per tax year:	10,200	10,680
Cash component:	5,100	5,340
Stocks and shares component:	Balance up to 10,200	Balance up to 10,680
Maximum in cash for 16 and 17 year olds	5,100	5,340
ENTERPRISE INVESTMENT SCHEME (30%† income tax relief in 2011/12, 20% income tax relief in 2010/11)	500,000*	500,000*
Maximum carry back to previous tax year for income tax relief	500,000	500,000
VENTURE CAPITAL TRUST (30% income tax relief)	200,000	200,000
* No limit for CGT reinvestment relief. † Subject to EU State aid approval

PENSIONS

	2010/11	2011/12
Lifetime allowance*	£1,800,000	£1,800,000
Lifetime allowance charge: Excess drawn as cash Excess drawn as income	55% of excess 25% of excess
Annual allowance	£255,000	£50,000
Annual allowance charge	40% of excess	20%-50% of excess
Special annual allowance	£20,000 - £30,000	N/A
Special annual allowance charge	20%-30% +	N/A
Max. relievable personal contribution	100% relevant UK earnings or £3,600 gross if greater
* May be increased under transitional protection provisions + Depends on taxable income: effect is to reduce relief to basic rate

WORKING AND CHILD TAX CREDITS

The main features of the tax credits are:

1. Child tax credit
   • Eligibility is assessed on household income.
   • The claimant must be responsible for one or more children aged 16 or under, or at least one child under age 20 and in full-time non-advanced education.
   • The family element of the tax credit is £545 per annum.
   • The child element is £2,555 per annum for each child.
   • The disabled child element is £2,800 per annum (where relevant).
   • HMRC will pay the CTC to the main carer for the child.
2. Working tax credit
   • The claimant, or one of the joint claimants, must be in qualifying remunerative work.
   • The amount of WTC will be based on circumstances which are primarily the number of hours worked and the income of the claimant (or joint income for a couple).
   • The age and working hours conditions are not straightforward. Generally, the minimum weekly working requirement will be:
     a) 16 hours for families with children and workers with a disability. The claimant can be aged 16 or over. b) 30 hours for workers with no children and no disability. The claimant has to be aged 25 or over.
   • The basic element of the tax credit is £1,920 per annum.
   • The couple or lone parent element is £1,950 per annum.
   • A 30 hour element of £790 per annum is payable where the claimant or one of the claimants works at least 30 hours a week (couples with children may aggregate their hours for this purpose).
   • A disabled worker element of £2,650 per annum or more is available where the claimant, or his or her partner, has a disability.
   • There is 50-plus element and a childcare element, worth 70% of care costs, subject to an eligible maximum of £300 a week.
   • For employees, payment will normally be made by their employer with their wages (except the childcare element which is paid direct to the main carer). For the self-employed, payment is made directly by HMRC.
3. Calculating the credits
   1. It is necessary first to total the various elements available to arrive at the maximum available amount of tax credits before any reduction on account of income. All elements can be reduced at the rate of 41% (ie 41p per £1 of income).

 

NATIONAL INSURANCE CONTRIBUTIONS FOR TAX YEAR 2011/12

Definitions

Lower Earnings Limit (LEL)	the minimum level of earnings at which an employee will qualify for a State Second Pension (S2P). This is also the lower level of earnings which will be used in determining any NI Rebate.
	For tax year 2011/12 the Lower Earnings Limit is £102 per week.
Upper Accrual Point (UAP)	the upper level of earnings on which an employee's S2P entitlement is based (or on which any NI Rebate is determined). For tax year 2011/12 (and subsequent years) the Upper Accrual Point is fixed at £770 per week.
Upper Earnings Limit (UEL)	the upper level of earnings on which full NICs are charged. The reduced 2% NI contributions will apply to earnings above this level. For tax year 2011/12 the Upper Earnings Limit is £817 per week.
NI Rebate	the Rebate of employer's and employee's National Insurance contributions that is available where an employee is contracted out of S2P. This is based on the employee's earnings between the Lower Earnings Limit (LEL) and Upper Accrual Point (UAP).
	The Rebate will vary depending on the type of pensions vehicle used to contract out of S2P. Where this is a final salary occupational scheme this will be 3.7% (employer) and 1.6% (employee) in respect of the employee's earnings between the LEL and UAP.
	Where this is a money purchase occupational scheme or contracted out money purchase stakeholder pension scheme the Rebate will be 1.4% (employer) and 1.6% (employee) in respect of the employee's earnings between the LEL and UAP. The aggregate Rebate will be determined on an age related basis (varying from 3.0% to 7.4%) and any further Rebate due (ie over and above the amounts mentioned earlier in this paragraph) will be paid by the HMRC NICO to the scheme after the end of the tax year.
	Where this is a personal pension or stakeholder scheme National Insurance contributions will be paid at the contracted in rate and the Rebate, which will be determined on an age related basis, will be paid directly to the member's personal pension by the HMRC NICO after the end of the tax year to which it relates. The Rebates will also vary in accordance with an individual's earnings, in each of the following two bands:
	Band	Age related Rebate
	1 (£5,304 - £14,400)	9.4% - 14.8%
	2 (£14,401 - £40,040)	2.35% - 3.7%
Primary Threshold	the level of earnings at which employees start to pay Class 1 National Insurance contributions.
	For tax year 2011/12 this is £139 per week.
Secondary Threshold	the level of an employee's earnings at which the employer starts to pay Class 1 National Insurance contributions.
	For tax year 2011/12 this is £136 per week.

Employees - Class 1

Contracted in	Nil on first £139 per week (i.e. up to Primary Threshold)
	12% of £139.01 per week to £817 per week.
	2% on earnings above £817 per week.
Contracted out via occupational scheme	Nil on first £139 per week (i.e. up to Primary Threshold)
	10.4% of £139.01 per week to £770 per week
	12% of £770.01 per week to £817 per week.
	2% on earnings above £817 per week.
	The employee's NI Rebate is still payable in respect of the employee's earnings between the LEL and UAP including those in excess of the LEL and up to and including the Primary Threshold. In the first instance, the Rebate reduces the National Insurance contributions payable by the employee. However, where the National Insurance contribution payable by the employee is reduced to nil, the excess Rebate will be available for the employer to set against his overall National Insurance contribution bill.
Married Women and Widows Reduced Rate	5.85% of £139.01 to £817 per week.
	2% on earnings above £817 per week.

Employer - Class 1 Contributions

Weekly Earnings	Contracted In %	Contracted Out
		COSR %	COMP** %
On first £136	Nil	Nil	Nil
£136.01-£770	13.8	10.1	12.4
Over £770	13.8	13.8	13.8
Although the reduced level of National Insurance contributions only applies to the employee's earnings in the band between the Secondary Threshold (£136 per week) and the UAP (£770 per week), the NI Rebate is still available in respect of the employee's earnings between the LEL and UAP, including those earnings between the LEL (£102 per week) and the Secondary Threshold (£136 per week). Employers are able to reduce their overall National Insurance contributions liability to reflect the Rebate applicable to the employer's contributions on the employee's earnings between £102 per week and £139 per week. ** Where a COMP (Contracted Out Money Purchase Occupational Scheme) is involved the Rebate is determined on an age related basis and any additional Rebate due over and above that shown above will be payable by HMRC NICO to the scheme after the end of the tax year. This will also apply to a Contracted Out Money Purchase Stakeholder Pension Scheme (COMPSHP). COSR is a Contracted Out Salary Related Occupational Scheme.

Self-Employed

Class 2 (lower profits limit)	£2.50 per week flat rate. (applicable where profits are less than £5,315 per annum)
Class 4	9% of profits between £7,225 p.a. and £42,475 p.a.
	2% on profits above £42,475 p.a.

Voluntary Contributions

Class 3

£12.60 per week

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The contents of this news item are based on the proposals put forward by the Chancellor in his Budget speech of March 2011 and explained in documents subsequently published by HMRC, the Treasury and the Office for Budget Responsibility. All Budget proposals may be subject to change before the relevant Finance Act is passed (which is expected to be in July 2011).
References to spouse, husband and wife and married couples include references to registered civil partners and civil partnerships.
This news item is provided for general consideration only and no action should be taken or refrained from based on its contents alone. Accordingly, no responsibility can be accepted for any loss occasioned as a result of any such action or inaction. Professional advice must always be taken.

Burley Financial Services Ltd is a private limited company registered in England and Wales under company no. 121 7536.
Burley Financial Services Ltd is authorised and regulated by the Financial Services Authority.
We are entered on the FSA Register no 125891 at www.fsa.gov.uk/register