News Articles

2011 Budget - Key Points for Tourism

Main Theme

This is "the Business Budget". The main theme is Stability and Credibility to counter the UK's lost of growth and competitiveness in the world market. This means that it is a business sector focused budget - focusing on initiatives support businesses which provide opportunities to provide growth and employment for the UK economy. The main initiatives are to make the tax system simple and internationally competitive, getting rid of unnecessary regulation and producing educated and flexible workforce.

Forecasts

Growth forecast: 1.7% for 2011 (revised down)
   2.5% for 2012
   2.9% for 2013
   2.9% for 2014
   2.8% for 2015

Inflation Forecast: 4-5% this year, dropping to 2% by 2013

Points of Interest

There will be a consultation on Income Tax and National Insurance systems being integrated - although this will take a number of years to achieve.
Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011
Lord Young's recommendations on Health and Safety to the enacted in full
In changes to planning legislation there will be a presumption in favour of development with planning bodies being expected to prioritise jobs and growth. (this should be of benefit to tourism businesses)
There will be a moratorium of three years for small business on "new domestic regulation"
There will be a partial review of the Equality Act
Rate relief holiday for small businesses is to be extended for another year
21 Enterprise zones will be established in England with special rules on taxation, reliefs and allowances. Local authorities will be allowed to keep "business rate growth" in their zones

Main Initiatives with Tourism Implications

FHL Rules
From April 2011, new tax rules for FHL will take effect, so that loss relief may only be offset against income from the same FHL business. Letting and availability thresholds will be increased from April 2012.

Entrepreneurs' relief
• From 6 April 2011, the Government will increase to £10 million the lifetime limit on capital gains qualifying for entrepreneurs' relief.

Corporation tax
• The Government will reduce the main rate of corporation tax from 28 per cent to 26 per cent from April 2011. The rate will then be reduced by a further 1 per cent in each of the following three years, and as a result will be 23 per cent by 2014.

Business rate discount in Enterprise Zones
• The Government will offer up to 100 per cent discount on business rates to businesses located in Enterprise Zones for five years.

Small business rate relief holiday: extension
• The small business rate relief holiday will be extended by one year from 1 October 2011.

Gift Aid

The Gift Aid benefit limit will be increased from £500 to £2,500, subject to the existing 5 per cent limit, from April 2011. New guidance will be published to help clarify what constitutes a benefit.
From April 2013, the Government will introduce a new scheme to allow charities to claim Gift Aid on up to £5,000 of small donations without the need for Gift Aid declarations.
The Government confirms that it will introduce an online system for charities to claim Gift Aid and as a first step will shortly be publishing ‘intelligent' forms (which contain automatic checks) for charities to use to apply for and claim tax reliefs.
To help fund the introduction of Gift Aid online filing, the Government will withdraw SA Donate for tax returns for 2011-12 onwards.
There will be a reduced rate of inheritance tax of 36 per cent for estates leaving 10per cent or more to charity.
The Government will consult in 2011 on proposals to encourage donations of pre-eminent works of art or historical objects to the nation in return for a tax reduction.
The Government will legislate an extra statutory concession under which HMRC makes repayments of tax to certain charities without requiring a tax return to be completed.

Alcohol

Alcohol duty rates will increase by 2 per cent above the RPI on 28 March 2011. This will add 4 pence to the price of a pint of beer, 15 pence to the price of a bottle of wine, and 54 pence to the price of a bottle of spirits.
The review of alcohol taxation in November 2010 announced measures to encourage the consumption of lower strength beers. The Government will introduce a new additional duty on beers over 7.5 per cent alcohol by volume (abv) in strength at a rate of 25 per cent of general beer duty. This will add 25 pence to the price of a can of "super strength" lager. A reduced rate of 50 per cent of general beer duty will be introduced for beers of 2.8 per cent abv or below and above 1.2 per cent abv in strength. This will reduce the price of a pint of beer at 2.8 per cent abv by 18 pence. These changes will come into effect from 1 October 2011.

Gaming Duty

Gaming duty bands will increase in line with the RPI for accounting periods starting on or after 1 April 2011.
All rates of amusement machine licence duty will be increased in line with the RPI from 4pm on 25 March 2011.
As announced in December 2010, the Government will reform the taxation of gaming machines and introduce a machine games duty. The Government intends to consult on the design of the new tax in May 2011. Subject to legislation in Finance Bill 2012, implementation will follow in early 2013.

Air Passenger Duty

The policy to move to a per plane duty has been canned as being counter to international law
Air Passenger Duty (APD) rates will be frozen for 2011-12. The RPI increase assumed in the forecast will be deferred and implemented alongside the April 2012 RPI increase.
A consultation has been launched to make the existing per passenger system fairer (ie., review banding)
The consultation will include plans to extend the duty to flights taken aboard business jets.

Abolished Reliefs
Among the 43 tax reliefs abolished there are