Finance Act 2011

JurisdictionUK Non-devolved
Citation2011 c. 11


Finance Act 2011

2011 CHAPTER 11

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[19th July 2011]

Most Gracious Sovereign

WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-

1 Charges, rates, allowances etc

Part 1

Charges, rates, allowances etc

Income tax

Income tax

S-1 Charge and main rates for 2011-12

1 Charge and main rates for 2011-12

(1) Income tax is charged for the tax year 2011-12.

(2) For that tax year-

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

(c) the additional rate is 50%.

S-2 Basic rate limit for 2011-12

2 Basic rate limit for 2011-12

(1) For the tax year 2011-12 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with "£35,000".

(2) Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.

S-3 Personal allowance for 2011-12 for those aged under 65

3 Personal allowance for 2011-12 for those aged under 65

(1) For the tax year 2011-12 the amount specified in section 35(1) of ITA 2007 (personal allowance for those aged under 65) is replaced with "£ 7,475".

(2) Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply fo r that tax year.

Corporation tax

Corporation tax

S-4 Main rate for financial year 2011

4 Main rate for financial year 2011

(1) In section 2(2)(a) of FA 2010 (main corporation tax rate for financial year 2011 on profits other than ring fence profits), for "27%" substitute "26%".

(2) The amendment made by this section is treated as having come into force on 1 April 2011.

S-5 Charge and main rate for financial year 2012

5 Charge and main rate for financial year 2012

(1) Corporation tax is charged for the financial year 2012.

(2) For that year the rate of corporation tax is-

(a) 25% on profits of companies other than ring fence profits, and

(b) 30% on ring fence profits of companies.

(3) In subsection (2) "ring fence profits" has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).

S-6 Small profits rate and fractions for financial year 2011

6 Small profits rate and fractions for financial year 2011

(1) For the financial year 2011 the small profits rate is-

(a) 20% on profits of companies other than ring fence profits, and

(b) 19% on ring fence profits of companies.

(2) For the purposes of Part 3 of CTA 2010, for that year-

(a) the standard fraction is 3/200ths, and

(b) the ring fence fraction is 11/400ths.

(3) In subsection (1) "ring fence profits" has the same meaning as in Part 8 of that Act (see section 276 of that Act).

S-7 Increase in rate of supplementary charge

7 Increase in rate of supplementary charge

(1) In section 330 of CTA 2010 (supplementary charge in respect of ring fence trades), in subsection (1), for "20%" substitute "32%".

(2) The amendment made by subsection (1) has effect in relation to accounting periods beginning on or after 24 March 2011 (but see also subsection (3)).

(3) Subsections (4) to (10) apply where a company has an accounting period beginning before 24 March 2011 and ending on or after that date ("the straddling period").

(4) For the purpose of calculating the amount of the supplementary charge on the company for the straddling period-

(a) so much of that period as falls before 24 March 2011, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

(b) the company's adjusted ring fence profits for the straddling period are apportioned to the two separate accounting periods in proportion to the number of days in those periods.

(5) But if the basis of apportionment in subsection (4)(b) would work unjustly or unreasonably in the company's case, the company may elect for its profits to be apportioned on another basis that is just and reasonable and specified in the election.

(6) The amount of the supplementary charge on the company for the straddling period is the sum of the amounts of supplementary charge that would, in accordance with subsections (4) and (5), be chargeable on the company for those separate accounting periods.

(7) In relation to the straddling period-

(a) the Instalment Payments Regulations apply as if the amendment made by subsection (1) had not been made, but

(b) those Regulations also apply separately, in accordance with subsection (8), in relation to the increase in the amount of any supplementary charge on the company for that period that arises as a result of that amendment.

(8) In the separate application of those Regulations under subsection (7)(b), those Regulations have effect as if, for the purposes of those Regulations-

(a) the straddling period were an accounting period beginning on 24 March 2011,

(b) supplementary charge were chargeable on the company for that period, and

(c) the amount of that charge were equal to the increase in the amount of the supplementary charge for the straddling period that arises as a result of the amendment made by subsection (1).

(9) Any reference in the Instalment Payment Regulations to the total liability of a company is, accordingly, to be read-

(a) in their application as a result of subsection (7)(a), as a reference to the amount that would be the company's total liability for the straddling period if the amendment made by subsection (1) had not been made, and

(b) in their application as a result of subsection (7)(b), as a reference to the amount of the supplementary charge on the company for the deemed accounting period under subsection (8)(a).

(10) For the purposes of the Instalment Payment Regulations-

(a) a company is to be regarded as a large company as respects the deemed accounting period under subsection (8)(a) if (and only if) it is a large company for those purposes as respects the straddling period, and

(b) any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined if the amendment made by subsection (1) had not been made.

(11) In this section-

"adjusted ring fence profits" has the same meaning as in section 330 of CTA 2010;

"the Instalment Payments Regulations" means the Corporation Tax (Instalment Payments) Regulations 1998 ( s.i. 1998/3175 );

"supplementary charge" means any sum chargeable under section 330(1) of CTA 2010 as if it were an amount of corporation tax.

Capital gains tax

Capital gains tax

S-8 Annual exempt amount

8 Annual exempt amount

(1) Section 3 of TCGA 1992 (annual exempt amount) is amended as follows.

(2) For subsection (2) substitute-

"(2) The exempt amount for a tax year is £10,600."

(3) For subsections (3) and (4) substitute-

"(3) If there is a relevant increase in RPI in relation to a tax year-

(a) the exempt amount is to be increased in accordance with Steps 1 and 2, and

(b) subsection (2) has effect from then on (for that and subsequent tax years) as if it referred to the increased amount,

unless Parliament otherwise determines.

(3A) There is a relevant increase in RPI in relation to a tax year if the retail prices index for the September before the start of the tax year is higher than it was for the previous September.

(3B) Steps 1 and 2 are-

Step 1

Increase the exempt amount for the previous tax year by the same percentage as the percentage of the relevant increase in RPI.

Step 2

If the result of Step 1 is not a multiple of £100, round it up to the nearest multiple of £100.

(4) If there is a relevant increase in RPI in relation to a tax year, the Treasury must before the start of that tax year make an order showing the amount arrived at as a result of Steps 1 and 2."

(4) The amendment made by subsection (2) has effect for the tax year 2011-12 and subsequent tax years.

(5) For the tax year 2011-12, section 3(3) of TCGA 1992 (indexation) does not apply.

(6) The amendment made by subsection (3) has effect for the tax year 2012-13 and subsequent tax years.

S-9 Entrepreneurs' relief

9 Entrepreneurs' relief

(1) In section 169N of TCGA 1992 (amount of relief: general)-

(a) in subsection (4) for "£5 million" substitute "£10 million", and

(b) in subsection (4A) for "£5 million" substitute "£10 million".

(2) The amendments made by this section have effect in relation to qualifying business disposals occurring on or after 6 April 2011.

Capital allowances

Capital allowances

S-10 Plant and machinery writing-down allowances

10 Plant and machinery writing-down allowances

(1) Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2) In section 56 (amount of allowances and charges), in subsection (1) for "20%" substitute "18%".

(3) In section 104D (writing-down allowances: special rate expenditure)-

(a) in subsection (1) for "10%" substitute "8%", and

(b) after that subsection insert-

"(1A) But, in relation to special rate expenditure incurred wholly for the purposes of a ring fence...

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