The Learn Centre 2011 Budget SummaryThursday, March 24th, 2011
The Chancellor presented his 2011 Budget to Parliament on 23 March. A detailed review of the payroll-related measures will appear in our weekly newsletter on Monday, 28 March.
The following is a short summary of the key measures set out in the 2011 Budget.
Personal tax allowances
From April 2012, the personal allowance will increase by £630 to £8,105. The basic rate limit will be reduced by the same amount, down to £34,370. The higher rate threshold will therefore remain unchanged at £42,475. All other income tax, personal allowances and limits that are subject to indexation will be increased in line with the retail prices index (RPI).
Consumer Prices Index
From April 2012, the CPI will replace the RPI as the default indexation for all NICs rates, limits and thresholds. However, for the duration of this Parliament, the annual increases in the lower earnings limit, employer NICs threshold and the age-related tax allowances will be increased in line with the RPI.
Implementing the Office of Tax Simplification’s proposals
Of the various tax reliefs considered by the Office of Tax Simplification (OTS), those relevant to payroll which have been identified for abolition from April 2012 or later include
- Provision of meals on cycle-to-work dates
- Late night taxis
- Daily relief for the first 15p of luncheon vouchers.
The Government has accepted the recommendation of the OTS that PAYE income tax and Class 1 NICs should be integrated in the longer term, following consultation on the options, stages and timing of reform.
The IR35 rules will not be scrapped but improvements will be made to the way the rules are administered.
State Pension reform
The DWP is to publish a Green Paper to consult on options for reform of the basic state pension, which will include a proposal for a single tier pension of around £140 a week. The effect of this would mean the end of contracting out for defined benefit pension schemes.
Consultation is also planned on proposals to introduce a mechanism for automatically increasing the State Pension age to reflect longevity changes.
Mileage allowance payments
The approved mileage rate for cars and vans will increase, from April 2011, to 45p per mile (up from 40p) for the first 10,000 miles in a tax year, and 25p per mile thereafter. For NICs purposes, the new limit is 45p per mile irrespective of the mileage.
Use of the approved mileage rates and the passenger payments allowance is being extended to volunteer drivers.
Company cars and vans
For 2013/14, the appropriate percentages for company petrol cars will range between 11% and 35% for emission ratings between 95 and 215 g/km, with the 10% rate applying to ratings below 95 g/km.
For 2011/12, the multiplier for the car fuel benefit charge increases from £18,000 to £18,800.
There is no increase for 2011/12 in the £3,000 van benefit charge and the £550 van fuel benefit charge.
Want to find out more?
We’ll be publishing a much more in depth breakdown in our weekly payroll newsletter, which is completely free and which you can sign up for here. Alternatively you could try one of Learn Payroll’s very popular “Payroll Update” courses that cover all this and considerably more.