Budget Summary 2011 Introduction Income Tax Tax Credits and Benefits National Insurance Employees Savings and Investment Capital Gains Tax Inheritance Tax Corporation Tax Business Tax Value Added Tax Stamp Duty Land Tax Other Measures Income Tax Rates and Allowances National Insurance Contributions

Employees Company cars and fuel (Table C) Changes announced a year ago will take effect on 6 April 2011. The threshold of CO2 emissions at which the basic 15% benefit charge starts to increase falls from 130g/km to 125g/km. This means that the chargeable benefit will increase by 1% of list price for many cars. For a 40% taxpayer with a £15,000 company car, the extra tax will be £60 for the year 2011/12. The employer will also pay an additional £20.70 in Class 1A NIC. Further reductions in the thresholds have been announced to take effect in April 2012 and in April 2013, so the taxable amount will increase year on year for cars with higher ratings. The taxable benefit of free fuel provided for use in a company car is calculated by multiplying the same percentage by a fixed figure. This will increase for 2011/12 to £18,800 (2010/11: £18,000), so for many employees the taxable amount will increase for two separate reasons. Tax Trap Remember future tax increases when choosing a company car. Tax-free mileage allowances The mileage allowance which an employer can pay to an employee for business use of the employee's own car has been unchanged at 40p (25p for miles over 10,000 a year) since 6 April 2002. The higher rate increases to 45p with effect from 6 April 2011 (there is no change to the lower rate). Where the employer pays less than the approved rate, the employee can claim tax relief for the difference as a deductible expense. Disguised remuneration As many commentators predicted, the Chancellor announced a crackdown on what he believes are schemes which allow employees to receive income from a business without paying tax and NIC when they enjoy access to the money. Targeted schemes include employee benefit trusts and unapproved pension schemes. Certain narrow exemptions are contained in the legislation, but HMRC have run a long campaign against what they believe is the abuse of these arrangements for tax avoidance and they are confident that they have finally closed the loopholes.