Despite some speculation that Budget 2011 may have brought some unwelcome surprises (for example, outside possibilities of the Chancellor scrapping VCTs or changing the Inheritance Tax system), the net result appears to be largely as predicted with most key changes being confirmation of previously announced reforms.

The key winners from this year's budget are those on low to middle incomes with the Chancellors confirmation that, in addition to the £1000 increase in the personal allowance from 6 April 2011 there will be an additional increase of £630 from 6 April 2012 to £8,105.   This move is expected to benefit around 25 million people and take around 250,000 individuals out of income tax altogether.

On this note, however, retired clients are unlikely to see as significant a benefit as the age-related personal allowances have not increased to the same extent.  In addition, future tax thresholds are now to be increased by the usually lower CPI rate (rather than RPI) thus increasing at a lower rate and likely to mean more individuals will find themselves paying the higher rate of tax going forward.

Individuals who are likely to feel there is little benefit to them are high earners who are still likely to be paying the 50% income tax rate for the foreseeable future (despite indications that this additional tax rate is seen as a 'temporary' measure)

Our guidance in this section highlights the key points from this year's Budget - We also focus on the the main points relevant to Financial Planners, particularly in respect of the Pension changes from 6 April 2011 (Annual Allowance) and 6 April 2012 (Lifetime Allowance) with practical steps that can be taken for clients affected by these new rules.

Below you will find links to more detailed analysis of the 2011 Budget.  If these prompt questions of how the changes may affect you please click here to contact us or call us on 01246 810004.

Budget 2011 Key Points

Pension Factsheet

Income Tax Changes Factsheet

Pocket Tax Guide