2011 Budget News

Personal Tax Allowances will increase to £8,105 from April 2012 giving cash increase in people's pockets of £126.

The merging of tax and National Insurance is to be put for consultation, if this happens it will be a long way down the road and a full merger of the two is seen as unlikely.

Pensioners are not expected to face any increase in taxes.

The 50 pence tax rate is a temporary measure, HMRC will review this to see how effective it has been. However, income tax was also a temporary measure when it was introduced to fund the Napoleonic Wars!

Bad news for non-domiciled tax payers, the tax charge has increase from £30,000 this is for those who have been here for 7 years, to £50,000 for those who have been resident in the UK for 12 years or more.

Pension contributions made to a personal, stakeholder or company pension will be restricted to a maximum contribution of £50,000 a year.

Motorists will enjoy a 1p a litre reduction in the pump price as the 1p rise implemented earlier has been scrapped.

There have been no announcements on VAT.

Entrepreneur's relief has doubled from £5m to £10m.

IR35 is set to stay, there is to be a review of the dreaded IR35 legislation which has been a problem for contractors over the last 10 years. The Office of Tax Simplification are to carry out the review of the policy.

HMRC are to introduce statutory residence rules, this will hopefully clear the murky waters of what was IR20 and currently HMRC6 guidance on residency.