RMH Associates
Business & Accountancy Services
Pre Budget Report 2009
Pre Budget Report 2009 Headlines
• Time to pay arrangements for businesses extended for "as long as necessary".
• Exemption for business rates to be extended into 201-2011 - for properties at a RV below £18,000
• Planned rise in corporation tax from 21% to 22% for small businesses has been deferred until 2011-12
• Over-65s will need to work fewer hours to qualify for WTC; unemployed over-50s to be given new training
• Bingo duty cut from 22% to 20%
• The VAT standard rate is returning to 17.5% on 1 January 2010 as planned.
• GDP growth next year will 1%-1.5%, 3.5% in 2011 and 3.5% in 2012. The 3rd qtr of 2009 saw GDP shrink 0.3%. 2009 will see the economy reduce by 4.7%.
• Inflation to fall back to 1.5% by end 2010
• Potential losses from government's intervention into banks will fall to £10bn, from an anticipated £50bn
• The budget deficit will be £178bn this year, only a little larger than predicted. Next year the deficit will fall by £2bn to £176bn. 2011 will see it fall to £140bn, 2012, £117bn and 2013, £96bn.
• Up to £160m to be invested in clean energy and low carbon technology, including £90m for green infrastructure projects
• A £500m capital growth fund to be set up to aid businesses struggling to get access to credit.
• The UK's net debt stands at 56% of GDP. The figure will rise next year to 65% and to 78% by 2014/2015
• Electric cars to be exempt from company car tax for the next five years. Tax allowances to be introduced for electric vans.
• Pharma and bio-tech patents profits will be taxed at a lower corporation tax rate of 10%
• Households to be charged 50p extra per month on landlines to help fund the expansion of faster broadband across the country.
• Up to 10,000 students from low income backgrounds to receive financial support and assisted to get into internships and businesses
• Pension tax relief to be cut for those earning over £150,000
• The individual inheritance tax threshold to be frozen at £325,000, married couples at £650,000
• Current spending growth of 0.8% to continue until 2014-2015
• Another clamp down on tax avoidance especially offshore accounts
• £5bn in public spending savings through outsourcing of prisons and reforming legal aid
• A one-off levy on banking bonuses of more than £25,000 expected to put raise £500m.
• No public spending review before the general election.
• £2.5bn to support military operations along with £5m set aside to help returned soldiers set up businesses.
• From 2011, National Insurance contributions will rise by 0.5% for all employer, employee and self-employed rates except for those paid less than £20,000, saving £3bn a year.
Value Added Tax
| Value Added Tax (VAT) | Current rate | On and after |
| 01-Jan-10 | ||
| Standard rate | 15% | 17.50% |
VAT - Flat Rate Scheme
Sectoral rates for the VAT Flat Rate Scheme (FRS) are updated. Details of new sectoral rates are available on the HMRC website at www.hmrc.gov.uk. The FRS provides optional simplified VAT arrangements for businesses with turnover up to £150,000.
Corporation tax on profits
| £ per year (unless stated) | 2009-2010 | 2010-2011 |
| £0-£300,000 | 21% | 21%* |
| £300,001 - £1,500,000 | Marginal Relief | Marginal Relief |
| £1,500,001 or more | 28% | 28% |
* The planned small companies’ rate increase to 22% is deferred until 2011-12
Income tax allowances
| Income tax allowances £ per year (unless stated) | 2009-10 | Change | 2010-11 |
| Income tax personal and age-related allowances | |||
| Personal allowance (age under 65) | £6,475 | - | £6,475 |
| Personal allowance (age 65-74) | £9,490 | - | £9,490 |
| Personal allowance (age 75 and over) | £9,640 | - | £9,640 |
| Married couple's allowance* (age 75 and over) | £6,965 | - | £6,965 |
| Married couple's allowance* - minimum amount | £2,670 | - | £2,670 |
| Income limit for age-related allowances | £22,900 | - | £22,900 |
| Blind person’s allowance | £1,890 | - | £1,890 |
*Married couple's allowance is given at the rate of 10 per cent
Income tax: taxable bands
| 2009-10 | £ per year | 2010-11 | £ per year |
| Starting savings rate: | £0-£2,440 | Starting savings rate: 10%* | £0-£2,440 |
| 10%* | |||
| Basic rate: 20% | £0-£37,400 | Basic rate: 20% | £0-£37,400 |
| Higher rate: 40% | Over £37,400 | Higher rate: 40% | £37,401-£150,000 |
Additional rate: 50% | Over £150,000 | ||
* 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.
Inheritance tax
| Inheritance tax £ per year (unless stated) | 2009-10 | Change | 2010-11 |
| Individual inheritance tax allowance | £325,000 | - | £325,000 |
Stamp taxes and duties
Transfers of land and buildings (consideration paid)
| Rate | Residential in | Residential outside disadvantaged areas | Non-residential |
| disadvantaged areas | |||
| Total value of consideration | |||
| Zero | £0 - £150,000 | £0 - £125,000 | £0 - £150,000 |
| after 31 December 2009 | after 31 December 2009 | ||
| (£0 - £175,000 | (£0 - £175,000 | ||
| until 31 December 2009) | until 31 December 2009) | ||
| 1% | Over £150,000 - £250,000 | Over £125,000 - £250,000 | Over £150,000 - £250,000 |
| after 31 December 2009 | after 31 December 2009 | ||
| (Over £175,000- £250,000 until 31 December 2009) | |||
| (Over £175,000- £250,000 until 31 December 2009) | |||
| 3% | Over £250,000 - £500,000 | Over £250,000 - £500,000 | Over £250,000 - £500,000 |
| 4% | Over £500,000 | Over £500,000 | Over £500,000 |
Bingo duty
Bingo duty will be reduced to 20% at Budget 2010.
Landline Duty (on telephone landlines)
Landline Duty will be introduced at a rate of 50p per month for each line from 1 October 2010.
Vehicle Excise Duty for Motorcycles: 2010-11 rates
| VED band | Change from | 2010-11 |
| 2009-10 to 2010-11 | rate | |
| Up to 150cc | - | £15 |
| 151-400cc | - | £33 |
| 401-600cc | £2 | £50 |
| Over 600cc | £4 | £70 |
National insurance contributions
£ per week (unless stated) | 2009-10 | Change | 2010-11 |
Lower earnings limit, primary Class 1 | £95 | £2 | £97 |
Upper earnings limit, primary Class 1 | £844 | - | £844 |
Upper Accruals Point | £770 | - | £770 |
Primary threshold | £110 | - | £110 |
Secondary threshold | £110 | - | £110 |
Employees’ primary Class 1 rate between primary threshold and upper earnings limit | 11% | - | 11% |
Employees’ primary Class 1 rate above upper earnings limit | 1% | - | 1% |
Employees’ contracted-out rebate - salary-related schemes | 1.60% | - | 1.60% |
Employees’ contracted-out rebate - money-purchase schemes | 1.60% | - | 1.60% |
Married women’s reduced rate between primary threshold and upper earnings limit | 4.85% | - | 4.85% |
Married women’s rate above upper earnings limit | 1% | - | 1% |
Employers’ secondary Class 1 rate above secondary threshold | 12.80% | - | 12.80% |
Employers’ contracted-out rebate, salary-related schemes | 3.70% | - | 3.70% |
Employers’ contracted-out rebate, money-purchase schemes | 1.40% | - | 1.40% |
Class 2 rate | £2.40 | - | £2.40 |
Class 2 small earnings exception (per year) | £5,075 | - | £5,075 |
Special Class 2 rate for share fishermen | £3.05 | - | £3.05 |
Special Class 2 rate for volunteer development workers | £4.75 | £0.10 | £4.85 |
Class 3 rate (per week) | £12.05 | - | £12.05 |
Class 4 lower profits limit (per year) | £5,715 | - | £5,715 |
Class 4 upper profits limit (per year) | £43,875 | - | £43,875 |
Class 4 rate between lower profits limit and upper profits limit | 8% | - | 8% |
Class 4 rate above upper profits limit | 1% | - | 1% |
Working and Child Tax Credits rates
| £ per year (unless stated) | Apr-09 | Change | Apr-10 |
| Working Tax Credit | |||
| Basic element | £1,890 | £30 | £1,920 |
| Couple and lone parent element | £1,860 | £30 | £1,890 |
| 30 hour element | £775 | £15 | £790 |
| Disabled worker element | £2,530 | £40 | £2,570 |
| Severe disability element | £1,075 | £20 | £1,095 |
| 50+ Return to work payment (16-29 hours) | £1,300 | £20 | £1,320 |
| 50+ Return to work payment (30+ hours) | £1,935 | £30 | £1,965 |
| Childcare element of the Working Tax Credit | |||
| Maximum eligible cost for one child | £175 per week | - | £175 per week |
| Maximum eligible cost for two or more children | £300 per week | - | £300 per week |
| Percentage of eligible costs covered | 80% | - | 80% |
| Child Tax Credit | |||
| Family element | £545 | - | £545 |
| Family element, baby addition | £545 | - | £545 |
| Child element | £2,235 | £65 | £2,300 |
| Disabled child element | £2,670 | £45 | £2,715 |
| Severely disabled child element | £1,075 | £20 | £1,095 |
| Income thresholds and withdrawal rates | |||
| First income threshold | £6,420 | - | £6,420 |
| First withdrawal rate | 39% | - | 39% |
| Second income threshold | £50,000 | - | £50,000 |
| Second withdrawal rate | 6.67% | - | 6.67% |
| First threshold for those entitled to Child Tax Credit only | £16,040 | £150 | £16,190 |
| Income disregard | £25,000 | - | £25,000 |
Child Benefit
| £ per week | Jan-09 | Change | Apr-10 |
| Eldest/Only Child | £20 | 30p | £20.30 |
| Other Children | £13.20 | 20p | £13.40 |
Guardian's Allowance
| £ per week | Apr-09 | Change | Apr-10 |
| Guardian's Allowance | £14.10 | 20p | £14.30 |