Budget Summary 2010

Summary of Changes Affecting Private Individuals

They promised we wouldn’t like it and they were right. Other than freezing Council Tax, there was precious little to cheer in the Budget other than the hope that it may have the desired effect of reducing the yawning deficit in the public finances: time will tell regarding that.

However, there were some plums to be picked among the thorns. In particular, the tax regime affecting carers has been improved significantly. Also, the changes to National Insurance Contributions and the increase in the tax-free personal allowance will benefit the lower-paid. Adjustments will be made once the Retail Prices Index (RPI) for September is known in order to adjust the tax thresholds to prevent the change from benefiting higher-rate taxpayers.

Income Tax

Tax Thresholds - Although the increase by a further £1,000 from April 2011 in the tax-free allowance for Income Tax (IT) purposes will attract the headlines, the higher-rate limits are being frozen until at least 2014.

Furnished Holiday Lettings

The Government is cancelling the proposed changes relating to the taxation of those operating furnished holiday lettings businesses, but measures governing the ‘actual days let’ rules are being tightened up.

Investments

From 6 April 2011, the ISA limits will be increased in line with the RPI on an annual basis. One nice touch by the Chancellor is that the increases are to be rounded to the nearest £120, so that individuals who save monthly will be able to calculate their monthly savings more easily.

There are detailed changes to the legislation on Venture Capital Trusts (VCTs), which have the practical effect that a wider range of investments can now attract VCT status, and other changes, one of which is that Enterprise Investment Scheme and VCT companies no longer have to trade in the UK but need only have a ‘permanent establishment’ here.

Pensions

The Government is deferring by two years (to age 77) the age by which a pension must be vested by the pension holder. This applies now, but only to those who have not reached the age of 75. The detailed changes will take effect in 2011, so there will be a limited window of opportunity to take any necessary action.

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