Income tax allowances and rates
- personal allowance for the under 65’s increasing by £1,000 to £7,475 for 2011/12 , but with the basic rate band reduced so that higher rate taxpayers do not benefit (they of course gradually lose their personal allowance if annual taxable income exceeds £100,000)
- higher rate band level frozen to 2013/14
From 6 April 2011 the annual Individual Savings Account limit (currently £10,200, of which a half can be in cash) will increase in line with the RPI, and rounded to a convenient multiple of 120 for the ease of monthly savers.
The tax treatment is to be reviewed. This will consider whether changes can be made to the current rules “to ensure that non-domiciled individuals make a fair contribution to reducing the deficit in return for greater certainty and stability for those bringing skills and investment to the UK”.
Deduction of tax at source by individuals and non-corporate entities
Currently the requirement is to deliver an account to HMRC for income tax deducted at source from interest and royalty payments they make, and HMRC can then assess the amount of tax due to them. There is no set form for submitting an account and the new Finance Bill will allow HMRC to issue regulations specifying how and when an individual or other non-corporate should account for, and pay, income tax deducted at source.
This is being reviewed, to see how the system could be improved so as to reduce costs and make it easier to administer for both employers and HMRC. Initially there will be consultation with employers and payroll providers on mechanisms which could support more frequent or real time PAYE data.
The old issue of whether or not there is a need for a general anti-avoidance rule is on the agenda again. Consultation will take place later in 2010 to consider the case for developing such a rule.
Tax policy making
Proposals will be published involving how to improve the way tax policy is made. There is also a stated intention to create an independent Office of Tax Simplification.