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

Corporation Tax Rates The main rate of Corporation Tax (for companies with profits over £1.5m) has been 28% since 1 April 2008. It will be cut for the Financial Year 2011 (commencing 1 April 2011) to 26%, then to 25% for FY 2012, 24% for FY 2013 and 23% for FY 2014. These cuts are 1% more than had previously been announced. The small profits rate (for companies with profits up to £300,000) will fall to 20%, where it last stood for the year to 31 March 2008. The rate for future years has not been set in advance as it has for larger profits. The effective rate of tax in the band of profits between £300,000 and £1.5m is 27.5%. Tax Tip Consider incorporating a business to protect profits from high income tax rates. Returns In spite of appeals from businesses and advisers to delay the implementation of new online filing requirements, corporation tax returns must be made electronically from 1 April 2011.This includes the submission of statutory accounts in an electronic format known as iXBRL. Research and development credits R&D credits allow companies to deduct a multiple of qualifying expenditure for tax purposes. If £100 of cost is treated as £200 in computing tax, the company effectively receives a grant for incurring the expenditure. Qualifying R&D incurred by small and medium enterprises (SMEs) will enjoy a 200% deduction (up from 175%) from 1 April 2011, provided EU State Aid approval is obtained. At the same time, SMEs incurring vaccines research expenditure will see a cut in the allowed deduction from 140% to 120%. Further changes to improve and extend R&D relief are intended to be introduced in April 2012.