The key changes that come into effect from 1^st April, 2011, or 6^th April for income tax and capital gains tax, are:

• Main rate of corporation tax cut from 28% to 26%
• Small profits rate of corporation tax cut from 21% to 20%
• Personal allowance increased by £1,000 to £7,475
• All National Insurance rates increase by 1%

Other changes which will affect small businesses are:

Capital Allowances

The main rates of capital allowances will change from April 2012 rather than April 2011.  The annual investment allowance (AIA) will reduce from £100,000 per year to £25,000 per year, and the rates of writing down allowances for asset purchases not covered by the AIA will be cut from 20% to 18%, and from 10% to 8%.

Mileage Allowances

If an employee uses their own car for business journeys they can claim a tax free and NIC free mileage allowance (AMAP) from their employer.  This AMAP rate has been stuck at 40p per mile since about 2002, but will be increased to 45p per mile from 6^th April, 2011.  This rate applies for the first 10,000 business miles per year.  Any additional miles can be reimbursed at 25p per mile.

For further details please visit our Rates & Allowances page.