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Personal Tax Changes 2011/12

Newsletter issue - December 2010.

Personal Allowances

The tax-free personal tax allowances for 2011/12 have not been announced but we do know that the tax free allowance for those aged under 65 will be at least £7,475, although the increase of £1,000 from the present limit will only benefit basic rate taxpayers.

Child and Working Tax Credits

Working and Child Tax Credits are to be withdrawn at the rate of 41% from families with total income of £40,000 or more from 6 April 2011. Families with income of over £40,000 may no longer be eligible for the family element of £545 per year. The baby addition to the family element (also £545) will be withdrawn completely at the same time.

The change in income that can be disregarded for a tax credit claim will be reduced from £25,000 to £10,000 with effect from 6 April 2011.

Pensions

From 6 April 2011 the state pension will be increased by the greater of: the annual increase in earnings or prices, or 2.5%.

The standard minimum income guarantee given under the Pension Credit will be increased by the same cash amount as the state pension.

From 2011/12 a member of a pension scheme can contribute up to £50,000 per year into registered pension funds, and receive full tax relief on those contributions. This £50,000 cap includes employer contributions and the deemed increase in value of defined benefit pension schemes. If contributions of less than £50,000 have been made for three immediate preceding tax years when the individual was a member of a pension scheme, the unused cap for each tax year can be carried forward up to three years.

Savings

The overall tax-free ISA limit for 2011/12 will be £10,680, of which £5,340 can be saved in a cash form such as a bank savings account.

 


Christopher Kember FMAAT is licensed and regulated by AAT under licence number 7213. AAT is recognised by HM Treasury to supervise compliance with the Money Laundering Regulations and Sinden Thackeray Partnership is supervised by AAT in this respect.