1. 2011 UK Budget Briefing 25 March 2011 Debbie Annells Managing Director
The British
Chamber of Commerce
in Hong Kong
2011 UK Budget Briefing
25 March 2011
Debbie Annells
Managing Director
AzureTax Ltd

3. Budget Report UK Economy
• The economy is predicted to grow by 1.7% (1.2%) this year, 2.5% (2.3%) next year, 2.9% (2.9%) in 2013 and 2014 and 2.8% (2.7%) in 2015.
• The UK is set to miss the previous government’s “golden rule” – described as “disastrous” -of borrowing only to invest over the economic cycle.
• Consumer price inflation is expected to reach 4.4% by the end of before “returning to target in the medium term”. The inflation target remains at 2%, as measured by the Retail Prices Index.
• Unemployment is forecast to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015.

4. Borrowing/Deficit • The structural current deficit “should be in
balance” one year earlier by
• The measures are forecast to result in public
sector net borrowing of £146B (£149bn) this year,
£122bn (£116bn) next year, £70bn(£89bn) in
and £46bn (£60bn) in Mr Osborne said by
the deficit would be £29bn, .

5. Spending • The state accounts for
“almost half” of all national income which was
“completely unsustainable”.
Reductions in expenditure forecasts not evident however.
(GBP710B v GBP 696B last year)

6. Government Receipts

7. Government Spending
This amounts to approx GBP10,000 per person

8. Taxes • From January 4 2011, the main rate of VAT rose
from 17.5% to 20%. Current zero-rated items like
children’s clothes and magazines will remain.
(VAT rate in Germany 19%, in France 19.6%)
• Personal income tax allowance to be increased by
£1,000 in April 2011 to £7,475 – worth £170 a year to
basic rate taxpayers and to £8,105 in
• Councils offered extra funds to allow them to freeze
Council tax for one year from April 2011.

9. Merger of Income Tax and National Insurance
• A review of this will be implemented.
• Gift Aid limit to be increased from GBP500 to GBP2,500
Statutory definition of “residence” to be introduced in 2012

10. Taxes
• Capital Gains Tax remains in 18% for low and middle-income savers but from midnight 22 June 2010, higher rate taxpayers l pay 28%.
• 10 % reduction in Inheritance Tax, if 10% of estate gifted to charity.

11. Tax Policy Framework New framework introduced
Office of Tax Simplification identified 43 tax reliefs which will be abolished.

12. Income Tax Measures - Previous
50% top tax rate, on earnings over GBP150,000,
from 6 April 2010 – a “temporary” measure
Allowances phased out from GBP100,000

13. UK Income Tax rates 2010/11 £0 - £2,440 10%* £2,441 - £37,400 20%
2010/11 £0 - £2, %*
£2,441 - £37, %
£37, £150, %
£150,000 and above %
2011/12 £ £2, %*
£2, £35, %
£35, and above 40%
* Savings tax rate except interest is 20%. Dividends 10% / %/42.5%

14. UK Personal Allowances
(£ per year) / /12
Personal Allowance (age under 65) ,475 7,475
Personal Allowance (age 65-74) 9,490 9,940
Personal Allowance (age 75 and over) 9, ,090
Married couple’s allowance*
(age less than 75 and born after 6th April 1935) N/A N/A
(age 75 and over) 6,965 7,295
minimum amount 2,670 2,800
Aged income limit 22, ,000
* Abates by £1 for every £2 of income over £100,000 from 2010/11

15. Pensions - Previous Confirming previous announcements…
Salary over GBP180,000 – only basic rate relief
Salary over GBP150,000 – relief reduced on a sliding scale
In practice those on GBP130,000 or more maybe affected – salary calculated inclusive of employer pension/charity contributions
Annual allowance raised to GBP250,000, lifetime allowance to GBP1,800,000 – frozen till 2015/16

16. Capital Gains Tax Increased to 28% from midnight on 22nd June 2010
• Split year treatment not clear
Exempt amount £10,600
Entrepreneurs relief doubled to £10m from

17. Cigarettes, Alcohol and Fuel
• Fixed duty reduced to 1p per litre and duty “escalator” stopped
Equivalent to a saving to 5p per litre

18. Tax Avoidance and Tax Evasion
• 14 BN lost in 2008 per HMRC
New strategy paper to be issued
Enforcement of tax debts noticeably stricter
New Tax penalty regime coming in from April 2011, as previously announced.

19. Pensions
The government will accelerate the increase in state pension age to 66.
There will be regular reviews to increase pension age future.

20. Non UK Domiciles
• Remittance Basis Charge increases to £50,000 in year 12 of UK Tax residence.
No “other” announcements re Non Doms in this Parliament.
No remittance charge on direct investment into UK businesses.

21. Non UK Domicile Statistics
The number of individuals who filed a UK self-assessment (SA) tax return and indicated that they were non-domiciled was as follows:
The total amount of UK income tax and capital gains tax (CGT) paid by individuals who completed an SA return and indicated that they were non-domiciled was as follows:
Year
Number
110,000
111,000
117,000
140,000
123,000
Year
£ billion
3.3
4.0
5.0
6.9
5.9

22. Business • From April 2011, the threshold at which employers
start to pay National Insurance will rise by £21 per
week, above indexation.
• Corporation Tax will be cut this year by 2% to 26% and by 1% annually for the next three years, until it reaches 23%. The small companies’ tax rate will be cut to 20%; and in 2012 is TBA.
Special Northern Ireland Corporation Tax rate
R & D tax credits for SMEs 200% (from 175%)

23. Banks and Petroleum Companies
• The bank levy will be increased to 0.78% from Jan
2012 (0.7%), which will apply to the
balance sheets of UK banks and building societies
But smaller banks will not have to pay.
• Implemented in France and Germany and the US
Supplementary oil and gas co charge increases to 32%(20%)

24. TOP 10 UK TAX TIPS - 2010/2011 IHT - Annual gift value £3,000
CGT - Annual Exemption £10,500
Charitable donations for the Tax payer - up to 40% relief
Purchase p+m by business
(furnished holiday lettings loss cannot be outset against other
income after 5th April 2011)
NI and IT increases 6th April, so pay bonuses now.
ISA’s £10,200 ( £5,100 in cash)
VCT £200,000 (30% tax relief)
EIS £500,000 (20% tax relief increased to 30% in Budget). (58% relief inc CGT)

25. TOP 10 UK TAX TIPS – 2010/2011
Tax refunds for 2006/07 to be claimed (re Higher Rate relief on pensions)
If income under GBP130,000 for the last 3 years make pension conts up to £255,000; from 5th April its capped at £50,000.
Non -Residents - check 90 days rule in UK.
RBC - £30,000 payment arrangements in place by 5th April for next year’s payment.

26. Any Questions?