Despite the new Coalition Government and the changes that have been made in this week’s Budget, a number of measures that were implemented in this year’s earlier budget survived the transition and have now graduated into full aspects of law. To make things a bit clearer let’s take a look at what made it through from the Finance Act.
A host of changes are actually good news for UK businesses. For starters the yearly allowance of investment for plant and machinery capital expenditure has been doubled from £50,000 to £100,000. Entrepreneurs can also rejoice at the news that relief for the selling of some assets or entire businesses has also doubled. This law allows for up to £2 million of lifetime capital gains to be taxed at 10 percent.
Ailing businesses will be happy to hear that the ‘Time to Pay’ scheme has also had its life extended indefinately.
Be aware that not all changes are favourable to businesses and their employees.
The high-earners amongst us will no doubt be aware that the 50 percent income tax rate is now in effect, so anyone who earns £150,000 or more will feel the brunt of that ruling.
People who have incomes of £130,000 or more will find that their tax relief on pension contributions has been restricted, and also the planned rise of national insurance for employees, employers and the self-employed looks to have been scrapped by the coalition government.
Any home purchased by a first time buyer for £250,000 or lower will be free from stamp duty land tax providing the home is purchased between 24 March 2010 and 25 March 2012. All properties that cost more than £1million will be subject to a stamp duty tax rate of 5 percent from 6 April 2011.
The £325,000 nil rate threshold of inheritance tax will remain frozen till 2014/15.
An important factor to note is the possible 200 percent penalty charge for people who do not disclose details of their income and are therefore suspected of evading tax, through offshore facilities.
Index linking and contributions
From 6 April 2010, to gain the entire state pension you have to have made the necessary national insurance contributions for a total of 30 years, as opposed to the previous 39 years. If you are worried that you may have missed a year then fret not for you can make backdated payments for up to six years.
There are also schemes in place for people who have been forced into not paying national insurance contributions, in the event of looking after a child or disabled person. Home-based mothers and full time carers will find that their national insurance contributions are covered for the years in which they are unable to work.
Your marital status can have a huge bearing on your tax status, for instance if you have remaining personal allowance a total of £750 of this can be transferred over to your spouse tax free. Married folk are also allowed to transfer assets minus capital gains tax provided they are living together during the year in which the transfer takes place.
Married couples can also have significant advantages when it comes to inheritance tax, in fact entire estates can be left to your other half completely free of inheritance tax.