2010/11

Allowances

Personal Allowance (reduced for incomes over £100,000) ............................................................ £6,475

(£7,475 for 2011/12)

Capital Gains Tax Exemption ....................................................................................................... £10,100

Trustees CGT Exemption .............................................................................................................. £5,050

Inheritance Tax Threshold .......................................................................................................... £325,000

VAT Threshold .............................................................................................................................. £70,000

Income Tax Rates

Up to £37,400 ....................................................................................................................................20%

Over £37,400 .....................................................................................................................................40%

Over £150,000 ...................................................................................................................................50%

Trust Rates

Rate applicable to trusts ....................................................................................................................50%

Dividend Trust Rate .........................................................................................................................42.5%

Corporate Tax Rates

Up to £300,000 (going down to 20% on 1 April 2011)........................................................................21%

Over £1.5 million (going down by 1% p.a. from 1 April 2011) ............................................................28%

Capital Gains Tax

Flat rate for basic rate taxpayers ........................................................................................................18%

Flat rate for higher rate taxpayers (after 22 June 2010) .....................................................................28%

Value Added Tax

Flat rate up to 3 January 2011.........................................................................................................17.5%

Flat rate from 4 January 2011.............................................................................................................20%

Capital Gains Tax

For disposals on or after 23 June 2010 capital gains tax is increased from 18% to 28% to the extent that the gain (when added to the income for the year) exceeds the basic rate band. There are no indexation or tapering reliefs.

The limit applicable to Entrepreneur Relief is increased to £5million.

The annual exemption of £10,100 remains unchanged.

Capital losses for the current year, and losses brought forward, may be applied in the way most beneficial to the taxpayer.

Capital Gains Tax: Entrepreneur Relief

The Entrepreneur Relief for capital gains tax was increased in the March Budget to £2million to provide an

effective rate of 10% on disposals of business assets up to that limit. With effect from 23 June, the lifetime

limit of Entrepreneur Relief is being increased to £5million.

This coincides with the increase in the capital gains tax rate to 28% with effect from 23 June 2010 – gains on qualifying assets up the threshold will be chargeable at only 10%. Any gains over that limit will be chargeable at the rate appropriate to the individuals income. All other rules relating to Entrepreneur Relief remain the same.

Pension Contributions

Last year, proposals were announced whereby tax relief for pension contributions for those earning more than £130,000 would be restricted to the basic rate. This was to come into force on 5 April 2011 and to prevent people paying lots of contributions ahead of the game, there were forestalling provisions. Any contributions greater than £20,000 (or such higher amount which had habitually been paid each year) were subject to a high income excess relief charge which had the effect of denying higher rate relief.

This has now all been scrapped. There will instead be an annual allowance in the range £30,000 to £45,000 (actual figure to be announced later).

Pensions: Annuity Obligation

It is also intended to amend the obligation to purchase an annuity by age 75; pending new rules to be

proposed this obligation is to be deferred to age 77, for those who have not yet reached age 75. This is a temporary measure to give the government time to work out a future course which will probably be to scrap the mandatory age.

Value Added Tax

The rate of VAT is being increased on 4 January 2011 to 20%. There will as usual be forestalling provisions to catch arrangements designed to take advantage of the present rule by issuing a VAT invoice or causing

payment to be made before the rate increase, where the goods or services are not supplied until after 3

January 2011. These provisions will apply where: