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A Quick Guide to the 2010 Emergency Budget

Personal allowances. The personal allowance is increased to £7,475 from 6 April 2011. The change will only benefit basic rate taxpayers.

VAT. The standard rate of VAT increases to 20% from 4 January 2011.

Corporation Tax. Small Companies rate reduced to 20% from 21% from 1 April 2011. The rate paid by companies with profits over £1.5 million will reduce by 1% each year for four years from 1 April 2011. This will reduce the current rate of 28% to 24% by 1 April 2014.

Capital allowances. The annual writing down allowance is to be reduced from 20% to 18% from 1 April 2012.
The annual investment allowance is to reduce from £100,000 to £20,000 from 1 April 2012.
Zero-emission goods vehicles qualify for 100% capital allowances from 1 April 2010.

Capital Gains Tax. From 23 June 2010 the Capital Gains Tax rate for basic rate taxpayers remains at 18%, provided the taxable gain and income for the year is less than £37,400. For higher rate taxpayers the rate is 28%. The annual Capital Gains Tax exemption remains at £10,100.
The Entrepreneur’s relief is increased from £2 million to £5 million. This means that lifetime gains from the sale of a business of up to £5 million are taxed at 10%.

Savings. ISA limits are to be indexed each year from 6 April 2011.

Pensions. Currently you have to buy an annuity with your personal pension at age 75; from 22 June this will change to age 77.

Penalties. Late VAT returns will incur a penalty of £100 even if the VAT has been paid. This will apply as soon as it can be introduced into a Finance Act. Further penalties will apply to additional returns filed within a 12-month penalty period.

Anti-Avoidance (EBTs and EFURBS). Changes to the taxation of EBTs and EFURBS will apply from 6 April 2011. The government is to consider introducing a general anti-avoidance rule.

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