Change of Standard Rate

The standard rate of VAT will increase from 17.5% to 20% from 4 January 2011. Goods and services that are currently exempt from VAT or are subject to VAT at the zero, or 5% rates will not be affected by this change.

If you are planning to invoice or pay in advance to avoid the VAT rise, think again. There will be a special 2.5% VAT charge on such advance sales where the customer cannot recover all the VAT on the supply, and one or more of the following applies:

- the supplier and customer are connected,
- … Continue Reading

Corporation Tax

The small profits rate of corporation tax will be cut from 21% to 20% from 1 April 2011, when it was previously expected to increase to 22%. The small profits rate applies to profits of up to £300,000 if there are no associated companies. The corporation tax rates for large companies will reduce from 28% to 27% from next April and then fall by 1% per year eventually down to 24%.

Capital Allowances

The previous Government was always messing with capital allowances in an attempt to incentivise businesses to invest in this or that type of equipment. The new policy is … Continue Reading

The state pension age (SPA), from which individuals can receive the state pension, is currently 65 for men and is rising to 65 for women. Legislation is already in place to increase the SPA to age 66 for everyone from 2026, but the Government wishes to bring this date forward.

From April 2011 the state pension will be increased by the greater of: the annual increase in earnings or prices, or 2.5%. The standard minimum income guarantee given under the Pension Credit will be increased by the same amount as the state pension.

When a member of a money purchase pension scheme … Continue Reading

Child Benefit and Tax Credits

Child benefit is available to all parents of children under 16, and is not means tested. This benefit will be frozen at current levels until April 2014, and the money saved will be transferred to child tax credits.

Working and Child Tax Credits are to be withdrawn gradually from families with total income of £40,000 or more from April 2011. The special baby rate will be withdrawn at the same time, but the child element for less well-off families will increase by £150. There are a number of other changes planned for later years including a reduction … Continue Reading

The personal allowance for those under 65 will rise by £1,000 to £7,475 for 2011/12. However, this generous increase in tax free income will be limited to those who pay income tax at 20%, as the threshold at which 40% tax starts will be reduced to take into account the increased allowance. We won’t know the exact tax thresholds until the Autumn Budget statement, as the increases in threshold for 2011/12 will be based on the RPI to September 2010.

The rate of CGT is to increase from 18% to 28% from 23 June 2010, but taxpayers with taxable income and gains below £37,400 will continue to pay CGT at 18%.

All trustees and personal representatives with any level of income and gains will also rise to 28% from 23 June 2010.

We thought the Government would not increase the rate of CGT in the middle of a tax year, as that would cause so many complications when calculating the tax due for 2010/11. However, that is exactly what George plans to do. The increase in CGT is not as high as … Continue Reading

We all knew that Chancellor George Osborne was going to announce an increase in Capital Gains Tax (CGT) today, but we didn’t expect the rate to rise immediately. Other surprises included reductions in the rates of corporation tax for both small and large companies and in the rates of capital allowances for all businesses.

A rise in the standard rate of VAT to 20% was widely expected, but this increase has been delayed until 4 January 2011, which is the first working day after the Christmas break.

The 1% point increase in NI rates from 6 April 2011 is already planned, but … Continue Reading

If a property is not a seller’s main residence then capital gains tax (CGT) may be payable on the profit. To get round this some buy-to-let landlords are trying to disguise their profits from the tax man after selling properties. HMRC is onto this practice however, and officials are increasingly trawling through Land Registry records to check the accuracy of tax returns.

Thanks to the freedom of information act, it has been found that HMRC is spending 79% more on special CGT enquiries than two years ago, which suggests an aggressive approach to tackling tax evasion in this area.

About CGT

The profit … Continue Reading

Britain’s treasury chief, George Osborne, announced on Wednesday (16/06/2010) a massive overhaul of the country’s financial regulatory system. Power has been taken away from the Financial Services Agency (FSA) and handed back to the Bank of England.

The Bank of England will soon be responsible for keeping an eye on lenders, insurance companies and investment banks, in addition to supervising the health of the economy overall, in an attempt to prevent the repetition of the credit crisis.

The FSA has long been criticized for failing to foresee the near collapse of Britain’s banking system. The treasurer said the authority would be broken … Continue Reading

According to a survey by Entrepreneur Country, 94 per cent of small businesses with fewer than 100 employees stated that they used free or low-cost online services – such as Skype, Google Apps and LinkedIn – instead of paid for software applications.

These internet based opportunities mean that almost all start-ups pay little or nothing for much of their business software.

576 fast-growing companies were questioned, with about half operating out of an office – the rest used coffee shops, private member’s clubs and even hotel foyers.

The most popular technology was LinkedIn, 78 per cent said they were subscribers. Next on the … Continue Reading