Proposed Changes for 2011-12 and Beyond

Income tax personal allowance for under 65s is set to increase by £1,000 to £7,475 in 2011-12. The basic rate band will be reduced so that higher rate tax payers do not benefit from the increase in the personal allowance.

National insurance contributions – All Class 4 and Class 1 rates will increase by 1%. The lower profits limit and the employees' earnings threshold will rise. The employers' earnings threshold will rise by an extra £21 per week above indexation. The upper earnings and profits limits will be reduced to maintain the alignment with the income tax basic rate limit.

Corporation tax main rate will be reduced to 27% for the year to 31 March 2012, reducing at 1% per annum to 24% by 1 April 2014.  The small profits rate will be reduced to 20% from 1 April 2011.

Basic state pension will be uprated by a triple guarantee of earnings, prices or 2.5%, whichever is the highest.

The rates of Child Benefit will be frozen for 3 years.

The ISA limits will be increased in line with the Retail Price Index.

Capital allowances - from April 2012 annual investment allowance (AIA) reduces to £25,000, the 20% rate reduces to 18% and the 10% rate reduces to 8%.

Pensions – introduction of high income excess relief charge to be dropped and replaced with reduced annual allowance.