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

Business Tax Capital allowances For plant and machinery which is not fully relieved in the year of purchase by a 100% Annual Investment Allowance (AIA), writing down allowances (WDA) are given on the "reducing balance" of expenditure. This continues even if the plant is sold or scrapped - the residue of cost does not enjoy tax relief until the trade ceases or the amount falls below £1,000. A "short life asset" (SLA) election allows a business to claim full relief for particular assets when they are disposed of. The benefit of a SLA election has up to now only been enjoyed if the asset has a life of up to 4 years. This will be extended to 8 years. This will only benefit businesses which spend more than the AIA limit on new plant each year. In addition, important changes to capital allowances were announced last year to come into effect next year. The rates of WDA will be reduced for chargeable periods ending on or after 1 April 2012 (companies) or 6 April 2012 (unincorporated trades). After that, the "general pool" will be written down at 18% rather than 20%, and the "special rate pool" (typically longer-life assets and cars with carbon dioxide emissions rating above 160g/km) at 8% rather than 10%. The AIA - the amount of expenditure on plant and machinery that qualifies for a 100% immediate deduction - will be reduced from £100,000 to £25,000 for expenditure from 1 April/6 April 2012 onwards. It rose from £50,000 to £100,000 in April 2010. There are complex rules for computing both the WDA and the AIA for chargeable periods which straddle a change in rate. Tax Trap Capital allowances fall in April 2012 – watch timing of investment. IR35 The government has carried out a review of the "IR35" legislation, which imposes employee tax and NIC liabilities on certain businesses, typically companies, which HMRC believe are used to disguise employment and avoid PAYE. The difficulties that the present rules cause are recognised, but the government considers that the abolition of IR35 poses too great a risk to the tax revenue. Instead, it is intended to improve the administration of the rules by increasing specialist help for businesses and consultation of interested parties. Enterprise Zones (EZs) The government has announced the creation of 21 new EZs. Businesses in EZs enjoy several advantages, including: 100% discount on rates Enhanced capital allowances (these may be introduced where a case is made to support "high value manufacturing") Relaxed planning regulations