Budget Summary March 2011 – Future changes announced today
Income tax and NICs Reform — The Government has announced that it will consult on the options, stages and timing of reforms to integrate the operation of income tax and National Insurance contributions (NICs). If this progresses to legislation, it will be a major reform of theUK tax system.
Enterprise Investment Scheme and Venture Capital Trusts — Subject to State aid approval, legislation will be introduced in Finance Bill 2012 making the following changes to the Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) which will have effect on and after 6 April 2012:
- an increase in the thresholds for the size of qualifying company for both EIS and VCTs to fewer than 250 employees and to the company having no more than £15million of gross assets before the investment;
- an increase in the annual amount that can be invested through both EIS and VCTs in an individual company to £10million; and
- an increase in the annual amount that an individual can invest through EIS to £1million.
Inheritance Tax Changes:
- The inheritance tax nil rate band is frozen until April 2015.
- The Government has announced that a reduced rate of inheritance tax (IHT) will apply where 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil rate band) is left to charity. In those cases the current 40% rate will be reduced to 36%. The new rate will apply where death occurs on or after 6 April 2012.
Business Premises Renovation Allowance — The Government has confirmed it will extend the allowance for a further five years from 2012.
- Registration, deregistration and changes in registration details will have to be completed online from 1 August 2012.
- VAT registered traders at April 2010, that are presently not legally required to file returns online (those with turnover under £100,000), will be brought into the online filing net for returns beginning on or after 1 April 2012.
Review of Non-Domicile Taxation — At the June Budget 2010, the Government confirmed that it would review the taxation of non-domiciled individuals. The Government will introduce the following reforms:
- remove the tax charge when non-domiciles remit foreign income or capital gains to the UK for the purpose of commercial investment in UK businesses;
- simplify some aspects of the current tax rules for non-domiciles to remove undue administrative burdens;
- increase the existing £30,000 annual charge to £50,000 for non-domiciles who have been UK resident for 12 or more years and who wish to retain access to the beneficial tax regime (the remittance basis). The £30,000 charge will be retained for those who have been resident for at least seven of the past nine years and fewer than 12 years;
- additionally, a statutory definition of residence is to be created to provide greater certainty for taxpayers.