STOP PRESS 2011 Budget Headlines

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31 March 2011


  • The lifetime allowance for Entrepreneurs' Relief is set to double to £10m from April this year.
  • Income tax relief on Enterprise Investment Schemes will increase from 20% to 30% from April this year.
  • Corporation Tax is to be cut by 2% in April, not 1% as previously planned.

Inheritance Tax

For deaths on or after April 2012, the IHT rate will be reduced from 40% to 36% on a person's death if 10% or more of their estate is left to charity.  The Government are to issue a consultation document before the summer setting out the detailed implementation of this policy.

Domicile and Residence

  • The tax charge of £30,000 on non-domiciliaries who have been resident in the UK for more than 7 years will remain at £30,000 but will be increased to £50,000 for those who have been resident in the UK for more than 12. 
  • The tax charge that arises for non-doms when they remit foreign income or capital gains into the UK will be removed if it is for the purposes of investing in UK businesses.  There will be further consultation on the details of this.
  • Some aspects of the current tax rules for non-doms are to be simplified to remove undue administrative burdens.
  • A statutory definition of residence is to be introduced to reduce uncertainty.

Tax Allowances

The default assumption for increases to tax allowances and exemptions such as the CGT annual exemption, income tax personal allowance, IHT nil rate band and ISA allowances is currently based on the retail prices index.  From 2012, these will be based on the consumer prices index and, as a result, the allowances and exemptions will increase more slowly in the future.


The Government are to legislate, or to consult on legislating, against a raft of tax avoidance measures including:-

  • High risk tax avoidance schemes (where the intention is to retain tax while in dispute with HMRC), specific schemes (e.g. to avoid SDLT) and areas where there have been repeated attempts at tax avoidance (e.g. income tax losses and unauthorised unit trusts).
  • Disguised remuneration.  A new employment income tax charge will apply where sums of money or other assets which are in essence the rewards of employment are routed via the conduit of a third party.  This is primarily aimed at employee benefit trusts (EBTs) and employer-financed retirement benefit schemes (EFRBS) but may well catch other innocent situations.
  • Misuse of the UK's Double Tax Treaties


For further information, please contact Tom Hewitt on +44(0)117 902 2717 or email or Michael Westbrook on +44(0)117 902 7740 or email

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