Review of the March Budget 2010
24/03/10
The Chancellor, Alistair Darling, has published his 2010 Budget. Below you will find a summary of the main announcements.
Personal pensions tax relief
In their April 2009 Budget, the Government announced that with effect from 6th April 2011, tax relief on pension contributions would be restricted for those with gross income in excess of £150,000. These are referred to as the \'permanent changes\'.
The Act also included \'anti-forestalling restrictions\' to prevent higher earners from paying unusually large pension contribution to take advantage of current tax benefits prior to the permanent changes coming into play in 2011.
Alongside the March 2010 Budget, the Government has outlined its plans for introducing these changes.
Change to Personal Allowance
In April 2009 Budget the Government announced that with effect from 6th April 2010 individuals receiving an income of more than £100,000 per year would face a cut in their Personal Allowance. This would reduce by £1 for every £2 of income above £100,000.
This was restated in the March 2010 Budget.
New \'additional rate\' band of tax
In April 2009 Budget the Government announced that it would be introducing a new 50% rate of tax on income above £150,000 from April 2010.
This was restated in the March 2010 Budget.
Inheritance Tax
The nil rate band of Inheritance Tax will be frozen at £325,000 until 2014/2015.
Stamp Duty Allowance
For first time buyers Stamp Duty Allowance will double from £125,000 to £250,000 (from midnight on 24th March).
This is anticipated to be funded by a new 5% band of tax being introduced in the 2011/12 tax year on properties sold for £1,000,000 +.
Capital Gains Tax
The current CGT rate remains unchanged. However, Entrepreneurs\' Relief for CGT will be extended from £1m to the first £2m of qualifying gains made over a lifetime. This takes effect from April 2010.
Income Tax
No changes to basic and higher rates, however from April 2010 there will be an additional rate band of tax (see above).
Annual ISA limit
As announced earlier, for savers, from April the annual ISA limit will rise from £7,200 to £10,200. Future ISA limits will be indexed by RPI.
Winter Fuel Payments
The Government will guarantee payments for another year - this will be at least £250 for pensioners (£400 for those over-80).
Business Rates
Business rates will be cut for one year from October for SME’s (Small and Medium Enterprises).
Tax credit
Individuals over the age of 60 will now be eligible for Working Tax Credit provided they work for at least 16 hours a week.
National Insurance
In the March 2010 Budget it was restated that employee, employer and self-employed rates of National Insurance contributions (NIC’s) will increase by 0.5% from April 2011 in addition to the 0.5% increase announced in 2008.
However the level at which people start to pay NIC’s will increase in April 2011 by £570 above the level previously announced.
