1. The Budget March 2011

2. Andrew Hague Partner 3. Julie White Senior Tax Manager Mike Donnan Partner 4. Income Tax Reliefs Income Tax Reliefs ** Personal allowance reduced by 1 for every 2 of income over 100,000. ( reduce age allowance by 1 for every 2 of excess income over 24,000) 22,900 24,000 * Age allowance income limit 6,965 7,295 - 75 and over Married couples allowance (relief at 10%) 9,640 10,090 - 75 and over* 9,490 9,940 - 65 74* 6,475 7,475** - Under 65 Personal allowance 2010/11 2011/12 5. Income Tax Rates 50 # Over 150,000 50 # Over 150,000 *Only applicable to dividends and savings income Except dividends (32.5%) # Except dividends (42.5%) Other income taxed first, then savings income and finally dividends 40 37,401-150,000 40 35,001-150,000 20 0 37,400 20 0 35,000 10* 0-2,440 10* 0-2,560 % % Rate Band Rate Band 2010/11 2011/12 6. National Insurance UEL 2011/12 - 817 pw (2010/11 - 844pw) 1% 2% Above UEL 8% 9% Up to UEL Self Employed 12.8% 13.8% Employers 1% 2% Above UEL 11% 12% EmployeesUp to UEL 2010/11 2011/12 7. Tax Rates for individual earning 200,000 s 8. Impact on gross income 200,000 s 9. 2012 /13

Personal allowance up to 8,105

Basic rate band reduced to 34,370

Higher rate threshold remains unchanged

10.

Main rate of Corporation Tax (Financial Year from 1 April)

• FY 2010 28%

• FY 2011 26%

• FY 2012 25%

• FY 2013 24%

• FY 2014 23%

Small Companies rate

FY 2010 21%

• FY 2011 20%

Corporation Tax Rates 11.

Why cut corporation tax with a 150 billion budget deficit hole to fill?

A little of something is better than nothing at all

12. 13. Bonus v dividend decision

Corporation Tax rate falling

National Insurance rising

Revisit calculations each year

14. Potential future changes

Merger of Tax and National Insurance

IR35

Limited lifespan of 50% additional rate?

15.

A Budget for Enterprise?

16. Research and Development Tax Credits for SMEs 17. R&D Tax Credits for SMEs

Introduced 2002

Promote technological innovation

Subsidise cost of R&D through tax credits

18. Key Conditions

Global advance in science and technology

R&D expenditure to contribute to that advance

Technological uncertainty

Minimum expenditure of 10k

No longer need to own IP

19. Eligible Expenditure

Staff costs

Consumable materials

Energy

Subcontracted R&D

Not fixed assets

20. Current relief

Uplift tax deduction by 75%

Reduce CT and increase loss

Repayable credit at 14% up to PAYE/NI paid

21. Examples

SME spends 100k on qualifying staff costs and consumables in R&D activity in year.Company can deduct 175k in calculating profits/losses for year.

22. Proposed Changes

From 1 April 2011

Additional deduction 75% - 100%

From 1 April 2012

Additional deduction 100 125%

Restriction on repayable credit to PAYE/NIC abolished

Minimum expenditure condition abolished

NB all subject to state aid approval

23. Enterprise Investment Scheme 24.

Britain is open for business, say top investors

Entrepreneurs back Osbornes Budget

25. Letter in the telegraph 28/3/11

we applaud steps taken in budget

massive boost for start ups

shot in arm for enterprise

26. EIS Overview

Encourage individuals to invest in small trading companies

Help riskier companies compete for finance

Particularly helpful for start-ups/young businesses

27. Tax Reliefs

Income tax relief at EIS Rate

CGT exemption after 3 years

Separate CGT deferral/reinvestment relief

28. Key Conditions

Qualifying individuals(not connected) invest cash in aqualifying companywhich carries on aqualifying trade

29. Proposed Changes

2011/12 - EIS

• Income tax relief increased to 30%

2012/13

• Annual investment up to 1m for individual

• Annual investment up to 10m for company

• Increase in size of company that qualifies

30. Entrepreneurs Relief 31. CGT Putting it in context

1965 1988 30%

1988 1998up to- 40%

1998 Taper relief introduced

2004 10% rate for business assets

2008 18%

• Entrepreneurs relief on 1m of gains (10%)

2010 Entrepreneurs relief on 2m of gains (10%)

2010 Entrepreneurs relief on 5m of gains (10%)

CGT Putting it in context 32. Entrepreneurs Relief

Lifetime limit after 6 April 2011

• Up to 10m

Applies for

• Disposal of whole or part of a business

• Disposal of assets after business ceased

• Disposal of shares in a trading company

• • 5%+ voting rights

• • Officer or employee

• Associated disposal

33. Entrepreneurs relief - saving

2008/09 to 2009/10

1,000,000 at 8% saving80,000

2010/11 to 22 ndJune 2010

2,000,000 at 8% saving160,000

From 23 rdJune 2010

5,000,000 at 18% saving900,000

From 6 April 2011

10,000,000 at 18% saving1.8m

A husband and wife partnership or company could achieve savings of up to3.6min tax

34. Capital Allowances

Reduction in AIA from April 2012

Reduction in writing down allowance rates to 18% and 8% from April 2012.

Short life asset election extended from 4 to 8 years from April 2011.

List of energy saving technologies to be updated in summer 2011.

35. Capital Allowances short life assets (SLAs)

Keep SLAs out of capital allowance pool

Get full relief on net cost of asset

Cut off period currently 4 years

• Asset then goes into pool

To be increased to 8 years

36. Employees cars

80,000 list price cap removed on expensive car benefit

10% benefit in kind rate for low emission cars