Only time will tell if these aims are achieved by this budget and future steps the government may have to take.

Much of the changes which take effect from April this year were already known and therefore the budget was a mix of confirming these measures, introducing some changes from April and looking forward to April 2012.

The measure that grabbed most of the headlines was the reduction by 1p per litre in fuel duty, although most businesses in this area who rely heavily on road transport would probably have liked to see more measures to reduce and stabilise a cost that has increased so much in recent months. A welcome change was an increase in the approved mileage allowance for employees using their own car for business travel from 40p to 45p per mile for the first 10,000 miles. This increase goes some way to recognise the increased cost of motoring since the rate was last increased.

A surprise measure was the further reduction in the main rate of Corporation Tax from 28% to 26% from April 2011, with further annual 1% reductions until it reaches 23% by 1 April 2014. The small companies rate for profits up to £300,000 reduces from 21% to 20% from 1 April 2011 with no further reductions proposed.

As already announced the personal allowance for 2011/12 will be increased by £1,000 to £7,475. It was also announced that the allowance for 2012/13 will see an increase of £630 to £8,105. These increases will result in a tax reduction for a basic rate tax payer after the two years of £326 per annum. The point at which higher rate tax becomes payable will be reduced so that only basic rate tax payers benefit from the increases in personal allowances.

The 1% increase in all rates of national insurance for employers, employees and the self employed previously announced remains. The point at which employers start to pay national insurance is increased from £110 to £136 per week, a move which will reduce the cost of employing those at the lower end of the earnings scale.

A welcome announcement for businesses was the increase in additional deduction for qualifying expenditure on research and development from 75% to 100% giving a total deduction of 200%. This will give businesses a greater incentive to spend on R & D when they are looking to invest in new business opportunities.

Overall it is unlikely this year’s budget will have much effect on the total amount of tax paid by both businesses and individuals, which in these times of financial constraints was probably the best that could be hoped for.

If you require any more information do give Duncan & Toplis a call on Newark 01636 640321 or go to our Budget 2011 pages for a detailed breakdown