Top Ten Recent Tax changes for the New Tax Year
Topical headline tax changes for the new tax year some but not all announced in the budget
This is not comprehensive but hopefully all clients and friends will find at least two or three items below relevant or of interest. Please do ask if you have any questions.
1. Main Changes to Tax/ NIC Rates – personal and corporate
• From 6 April 2011 the tax free Personal Allowance for individuals is to increase to £7,475 but the amount charged at basic rate will decrease to £35,000
.• National Insurance for employees will increase from 06 April 2011 by 1% to 12% and 2% from 11% and 1%. For the self employed this increases to 9% and 2% instead of 8% and 1%. Employers NIC will increase to 13.8% from 12.8%
.• Company tax rate on profits below £300,000 to decrease to 20% from 21% from 01/04/2011.
2. New Restrictions on Furnished Holiday Lettings (FHL) relief
The important changes to the relief as suggested in the consultation will, subject to parliamentary review, be as follows
• From 6 April 2011 any loss can only be set against income from the same trade not other income as is common now.
• The day counts increase from April 2012 - for the property to qualify as an FHL business it will need to be available to let for 210 days per year and actually let for 105 days per year.
• Individuals whose businesses are treated within the FHL regime for one year will be allowed to elect for the same provisions to apply for the following two years regardless of the days count.
3. Mileage Allowances increase and new allowance for Charity Volunteers
From 6 April 2011 the car mileage allowance is to increase to 45 pence per business mile for the first 10,000 miles and remain at 25 pence per mile thereafter. An imaginative change is that volunteers for charity can now claim 5 pence per mile travelled on behalf of a charity where previously no relief was available as they were not employees.
4. New Enterprise Zones introduced – back to the future
In a reprise of an eighties idea twenty one new zones are to be (re) introduced in which businesses will qualify for relief from rates, relaxed planning regulations and enhanced capital allowances where the area focuses on manufacturing.
5. IR35 will not be scrapped
The IR35 rules re employed/ self employed status will remain but with changes to enforcement to allow greater clarity and certainty so they say.
6. Changes to Personal Tax Return penalties
It is not so widely known but for years up to 5 April 2010 the tax return late filing penalty was the lesser of £100 OR the tax due. If there was no tax due as for instance a refund was appropriate then the late filing penalty would be reduced to nil. From 31 January 2012 however if a personal tax return is filed late the penalty will always be £100. Further penalties apply as follows - over three months late - a daily penalty, over six months late - an additional £300 or five per cent of the tax due if this is higher, over twelve months late - a further £300 or a further five per cent of the tax due if this is higher.
7. Relief on Childcare Vouchers to be restricted to the basic rate of tax
Unless an employee or director joined a scheme before 6 April 2011 relief will be restricted under the childcare voucher scheme to the basic rate of tax. This is still likely to be beneficial for those who are paying for childcare and do not qualify for children's tax credits. Presently we are finishing the development of a website to offer a toolkit of documents to enable the implementation of the scheme for a small employer.
8. Welcome certainty to come on residency status for individuals coming to or leaving the UK
Following certain court cases taken aggressively by HM Revenue and Customs the position on whether an individual was resident in the UK for tax purposes or not was very uncertain. It is therefore welcome that in the Budget the government announced that there will be consultation on a statutory test of residency probably to be introduced from April 2013.
9. More generous rules for Research & Development Tax Credit
The percentage uplift for qualifying research and development will increase from 75 to 100% of expenditure from 1 April 2011. The onerous restriction limiting any refund to the amount of PAYE tax and National Insurance paid in the period will be abolished.
10. Ten percent Capital Gains Tax limit to increase to £10M from £5M
From 6 April 2011 the lifetime limit on sales that qualify for 10% capital gains tax will increase to £10M. Entrepreneurs’ relief reduces the capital gains tax rate from the usual rate of 28% to 10% on the sale of the whole or part of a trading business or shares in a trading company. As tax law treats a furnished holiday let property as a business it may also apply on the sale of qualifying property.
Please do get in touch if you want more detail or have any questions how this might apply to you. I am of course happy to help with your tax returns, give tax advice, offer help as a tax consultant/ advisor, give tax advisory services as a tax adviser / accountant covering London and all points west - West End, Ealing, Mayfair, Knightsbridge, Chiswick, Fulham, Chelsea, Notting Hill, Belgravia, Bayswater, Kensington, Ladbroke Grove, Kingston, Marylebone, Barnes, Putney, Richmond, Wandsworth, Kew, Putney.