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Budget Report April 2009

PERSONAL TAX CHANGES
Personal Allowances 2009-10

These remain as announced in the Pre-Budget 
report November 2008 and are:
From the 6 April 2009 the income tax personal 
and age related allowances are increased to:
Age under 65 - £6,475
Age 65 to 74 - £9,490
Age 75 and over - £9,640
The income limit for aged related allowances
(over 65's) is increased to £22,900.
Blind person's allowance increased to £1,890.
 
Personal Allowances 2010-11

The basic personal allowance will be reduced for
taxpayers who earn more than £100,000 per annum.
Where an individual's income is above £100,000
the basic personal allowance will be reduced by
£1 for every £2 their income exceeds £100,000.
 
Income Tax Rates 2009-10

Starting savings rate 10%* - £0 to £2,440
Basic rate 20% - £0 to £37,400
Higher rate 40% - Over £37,400

* There is a 10p starting rate for savings only.
If an individual’s non savings taxable income
exceeds the starting rate limit, the 10p starting
rate for savings will not be available for
savings income. 

New 50% Income Tax Rates from 2010-11

From 6 April 2010 a new income tax rate of 50%
will be applied to taxable income in excess of £150,000. 
 
Capital Gains Tax 2009-10

The annual exempt amount for individuals is
£10,100 (and for most trustees £5,050)
 
Inheritance Tax 2009-10

The individual IHT allowance is increased to
£325,000.

Pensioners Taxback Campaign

From autumn 2009 HM Revenue & Customs will be
targeting pensioners who receive the Pension
Credit to help them reclaim tax they may have
paid in error from bank or building society
interest they have received.
ISA's

2009-10
The ISA limit is increased to £10,200 (up to £5,100 
can be saved in cash) restricted to people
aged 50 or over.

2010-11
The limit is increased to the same level for all age groups.
 
Pensions - limiting tax relief at higher rates
From 6 April 2011 the Government intends to
restrict tax relief for individuals with an
annual income of £150,000 or more. Relief will be
withdrawn gradually so that taxpayers earning
over £180,000 will effectively achieve a 20% tax
deduction, the same as a basic rate tax payer.

From today, 22 April 2009, if the following
conditions also apply:

1. Your income is over £150,000
2. You make additional contributions in excess of
your existing ongoing contributions, and
3. Your total pension contributions in the year
exceed £20,000 (including employer's
contributions)
Then any higher rate tax advantage, on additional
contributions above the £20,000 limit, will be
subject to a special annual allowance tax charge
that will recover tax relief given at above basic
rate.
 
Excise Duty increases

Alcohol Duty

From midnight 22 April alcohol duty will rise by
2%, equivalent to:
1p on a pint of beer
13p on a 75cl bottle of spirits
4p on a 75cl bottle of wine

Tobacco Duty
After 6pm 22 April tobacco duty will rise by 2%,
which will increase the cost of a packet of 20
cigarettes by 7p.

Fuel Increases
Duty increases will add 2 pence per litre to the
cost of unleaded petrol and diesel from 1
September 2009.

Stamp Duty Land Tax
The present exemption from SDLT of residential
properties up to £175,000 is to be extended to 31
December 2009. After this date the SDLT threshold
will revert to £125,000 (£150,000 in
disadvantaged areas).

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BUSINESS TAX CHANGES

Furnished Holiday Lettings
Two radical changes to the taxation of income and
gains arising on the letting of furnished holiday
lets property have been published today.
1. Properties owned by UK tax payers situated in
the European Economic Area can now qualify.
Previously only properties situated in the UK
qualified; and
2. From 6 April 2010 the Furnished Holiday
Lettings rules are to be repealed!
Both of the changes have come about due to
compliance issues with EEA legislation. 
All client's who own and let properties within
the EEA, including the UK, may benefit from a
strategic review of their present property tax
planning due to these changes. It is vital that
the narrow window of opportunity occasioned by
this change be fully exploited, and we only have
until 5 April 2010 to consider capital gains tax
and income tax planning opportunities.

Business Payment Support Service (BPSS)
If you call the BPSS to ask for time to pay tax
you may owe, please take account of the following
extension of the circumstances HMRC will now
consider.
If you are likely to make a trading loss in the
current year, when these losses are determined
you can generally claim for the loss to be
carried back and set off against your previous
year's profits. Obviously you would need to wait
until the current years accounts are completed
and a formal loss relief claim is made.
In recognition of this right to set off losses,
BPSS advisers how now been instructed to take
reasonable estimates of these losses into account
when they agree to deferred payment of your
previous year's tax.
If you need help estimating your tax losses in
the current year we can help. 
 
Further extension of carry back of loss relief
This further extension to loss relief's already 
available will enable both incorporated and 
unincorporated to carry back current losses, that 
were previously restricted to set off against the 
preceding year's profits only, to the previous 3 
years profits. The following bullet points 
summarise the main points:
- The relief is now available for two years. For 
limited companies, trading losses in an 
accounting period ending between 24 November 2008 
to 23 November 2010. For unincorporated business 
losses agreed for a trading period that forms the 
basis period for 2008-09 and 2009-10.

- HMRC will make repayments occasioned by claims 
for the new relief on or after Budget Day 2009.

- The amount of the loss that can be carried back 
one year is still unlimited. Any carry back to 
the earlier two years will be limited to £50,000. 
The £50,000 limit is an annual limit.

- Losses will be applied to the latest of the 
three years first.

- As this is an extension to existing loss relief legislation
the current reliefs are still 
available.
 

Corporation Tax Rates


The small companies rate from 1 April 2009 is 
unchanged at 21 %.
 

Temporary First Year Capital Allowances


Since 1 April 2008 (corporation tax) and 6 April 
2008 (income tax) businesses that invest up to 
£50,000 on certain plant and equipment can write 
off the entire amount against their taxable 
profits. 

Any excess expenditure, over the £50,000 limit
is added to the pool of unrelieved expenditure 
and has qualified for a writing down allowance of 
20%.

Today the Chancellor has announced that to 
encourage investment he will create a temporary 
first year allowance of 40% which will be applied 
to the excess over the £50,000 limit. 

The new 40% allowance will be available for just one year
from 1 April 2009 (corporation tax) and 
6 April 2009 (income tax) and will apply to 
assets which would be added to the main capital 
allowances pool except cars and assets used for 
leasing.

 

VAT Changes


As expected the standard rate of VAT will be 
increased to 17.5% on 1 January 2010.

With effect from 1st May 2009, the thresholds for 
registration and deregistration are increased to 
£68,000 and £66,000 respectively.
 	   

 

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