2011 Budget Highlights

The facts below are extracts from the Budget Speech delivered by Chancellor George Osborne. No responsibility can be accepted for anyone taking or refraining from taking actions based upon the notes below. The Budget will be ratified later in the year through the Finance Act.

The Chancellor promised not to rattle through growth figures - he said average quarterly growth will be higher than forecast - but the annual forecast will be revised down to 1.7%.

Going through the new forecasts from the Office for Budget Responsibility, he said growth is predicted to be 1.7% for 2011, 2.5% next year, 2.9% in 2013, 2.9% in 2014 and 2.8% in 2015.

Mr Osborne said inflation is expected to be between 4% and 5% this year - dropping to 2.5% next year and 2% in two years' time.

Borrowing is expected to fall to £122bn next year, the Chancellor reported, and will continue to fall until it reaches £29bn in 2015/6.

Mr Osborne says the government will consult on merging National Insurance and Income Tax. The goal, he says, is to simplify them - not to increase taxes. It will make the tax system "fit for the modern age", he said, but it will take years to implement.

Corporation Tax is to be cut by 2% - more than the 1% previously announced. It will be the lowest in the G7.

Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011. The clear aim seeming to be reinforcing the UK as a centre for entrepreneurial investment.

The top 50% tax rate was regarded as a "temporary measure" but it is to remain for the time being. "We are all in this together." said Mr Osborne.

The "non-domiciled" charge is being increased to £50,000 for those who have been in the country 12 years - raising more than £200m.

Profits from the bank levy will fund a new £250m shared equity scheme for first-time buyers - which will help 10,000 families get onto the housing ladder for the first time.

To support the construction industry further and reinforce the culture of enterprise, there will be 21 "enterprise zones".

The small business rate relief holiday is being extended by one year to October 2012, at a cost of £370m, the Chancellor said.

To assist the young unemployed, 40,000 extra apprenticeships will be funded by Government.

Tax avoidance has been addressed whereby three forms of stamp duty land tax avoidance will be shut down.

There'll be help for families "who do pay their taxes but who struggle with the daily cost of living", Mr Osborne said - outlining measures such as the council tax freeze and more child tax credit for lower income families and a "pay lift" for public servants on less than £21,000.

In an attempt to help charities who have suffered lower donations during the last two years, it was announced that if people leave 10% of their Estate to charities then the rate of Inheritance Tax will be reduced by 10%.

The Chancellor confirms a rise in the personal tax allowance, which had been widely discussed. A two year staged rise will take the personal allowance first to £7475 and then to £8105 for 2012/13.

Finally, the Chancellor turned to Fuel Duties - it had been due to go up by 1p a litre above inflation next week, but Mr Osborne said a government has to "listen and respond" when oil prices rise. While revenues go up when the oil price rises, other tax intake falls, he says. He dismissed a proposal to cut the VAT rise on fuel - which went down well with his colleagues. He said a "fair fuel stabiliser" will be introduced from Thursday, which will raise an extra £2bn. The money will be used to delay the duty rise until next year.

A more detailed summary along with tax rates will be available shortly through our website www.walkerthompson.co.uk.

Midlands Excellence Awards

We are delighted to announce that Walker Thompson were presented with a Highly Commended award at the annual Midlands Excellence Awards held on the evening of the 3rd February 2011 at the International Convention Centre, Birmingham.

The award, presented by Sir Ranulph Fiennes OBE in front of over 1100 guests, recognises the significant attainment of quality which our business has achieved.

Photographs of the event will appear on our website in the next few days.

Walker Thompson website

Midlands Excellence Awards Finalist

We are pleased to announce that for the second year running the firm has succeeded in reaching the finals at the Midlands Excellence Awards.

The firm will be attending a prestigious awards ceremony to be held at the International Conference Centre Birmingham on 3 February 2011 where the key speaker will be Sir Ranulph Fiennes.

Walker Thompson are currently the only firm of Accountants in Coventry & Warwickshire who have been accredited against the IIE Standard of Excellence which is based upon the EFQM Quality Model.

“Clients can be assured of a high quality service by our dedicated team of accountants and support staff”

NIC Holiday for New Businesses

Further to the announcement in the June 2010 Coalition Budget, we now have more details regarding the NIC holiday for new businesses.

Subject to meeting the conditions, new businesses qualify for a deduction of up to £5000 on Employers NIC contributions, for each of the first ten employees taken on in the first year of trading. Each holiday will last for the first 52 week of employment.

Main Conditions:

Start up date: From 22 June 2010 to 5 September 2013. (But you can only deduct employers NIC due on earnings paid after 6 September 2010.)

Location: Northern Ireland, Scotland, Wales, East Midlands, North East, North West, South West, West Midlands, Yorkshire and Humber.
Some businesses located within the EU will be eligible where they are paying UK NICs.
This is based on your principal place of business.

Business Type: Managed Service Companies do not qualify.
IR35 – only salary or wage payments qualify, not ‘deemed earnings’.
Has to qualify for de minimis State Aid.

Start Date: Earlier of trading date and date first employee hired.

‘New’ Business: There are anti avoidance rules regarding what is considered a new business.


Points to bear in mind:

This legislation is expected to receive Royal Assent in early 2011. Therefore, if for any reason it does not become law, any relief already deducted will have to be repaid by 19 April 2011.

In the case of a limited company, directors count towards the first ten employees.

If an employee leaves, the replacement employee does not qualify if there are already ten employees in place.

Records of employees, earnings and contributions will need to be kept.

There will be a separate NIC holiday end of year return at 5th April.

Businesses need to apply for the scheme, the application form is available on the Business Link website.

2010 Coalition Budget

Here are a few of the changes brought in by Chancellor George Osborne's 2010 Coalition Budget.


Personal Tax Allowances
An increase of £1000 in allowances for 2011/12 for those <65 years old.

Tax Rates
The Basic Rate limit and the Upper Earnings & Profit limits for NIC have been reduced for 2011/12.

National Insurance
NIC Primary Threshold to increase from April 2011 plus a 1% increase in Employer Costs and Self Employed contribution.

Corporation Tax
Main Rate down by 1%.

Capital Gains Tax
Higher Rate Taxpayers to pay CGT at 28% after 23 June 2010.

VAT
Standard Rate of VAT increases to 20% from 4 January 2011.

If considering tax planning measures based upon the above we would encourage you to talk to us about the implications before making decisions.


For more information, please follow the links below
Walker Thompson
HM Treasury

Employment Law – A couple of interesting results

Some recent cases have interesting points to bear in mind when dealing with or thinking about employment tribunals and claims.

For example –

Sweeney v DLA Piper Solicitors

The Judge commented that, regarding an incident of claimed sexual harassment, that she had “‘laughed it off’ at the time”.

This was not, and should not be, a justification for harassment, but should help the employer in situations where an employee claims harassment concerning an incident which at the time had not created “an intimidating, hostile, degrading, humiliating or offensive environment”.

Your responsibility

If you become aware of any incident that could be considered to be harassment, it is important that you take action quickly to avoid claims against you. Possible actions to consider:

• Initiating grievance procedures on behalf of the victim,
• Initiating disciplinary procedures against those responsible
• Arranging additional training for managers / staff

County Court

An employee can take you to an employment tribunal for unfair or wrongful dismissal. If there is a breach of contract, they also have the option to sue before the County Court. This route is normally used when the value of the notice period is higher than the statutory cap applied in the Employment Tribunal, or where there is no claim for unfair dismissal.

The value of this claim has been limited to the expiry of the notice period, and/or where there are “stigma” damages.

However, the case of Edwards v Chesterfield Royal Hospital NHS Foundation Trust extended this rule to include not only the time a disciplinary procedure would have taken if done properly, but also covering losses sustained as a result of the breach of contract i.e. damage to the person’s career.

In this case, the employer failed to follow their own disciplinary procedure.

Your responsibility

• Follow your contractual disciplinary procedure
• If unsure, seek legal advice before embarking on the procedure

Reasonable Responses

The employment tribunal must look at any decision to dismiss within the context of the circumstances surrounding the action, including the conduct of the employee, and must satisfy itself as to whether the decision was within the range of reasonable responses.

Employment law is designed to prevent unreasonable action by employers, not to restrain employers from legitimate action.

Solutions for Clients: Insolvency

As part of Walker Thompson’s commitment to find effective solutions for clients, a relationship has been developed with The P&A Partnership who are specialists in the field of insolvency, an area of work which we do not undertake ourselves.

In these times of economic hardship, companies of all sizes have been going into liquidation including well known household names. However we appreciate that the impact of this and the impact of finance being restricted is causing financial hardship for individuals. Therefore we are offering individuals the opportunity to consider a planned settlement of debts through a Voluntary Arrangement which will be organised by P&A and which can avoid the necessity of personal bankruptcy.

The circumstances might be such as a buy to let mortgage which can no longer be funded from lower rental incomes, credit card rollovers, personal guarantees given to support a failed business or simply losing a previously well paid employment.

The first step is to complete a Financial Information form which can be found here. P&A will then assess fully the situation and advise on the options available.

Obviously we can assist in the completion of the form if asked.

The key message is “Do Something rather than Do Nothing”