The Chancellor of the Exchequer Alistair Darling MP delivered his 2009 Pre Budget Report today. The report contained a number of expected measures together with some unexpected changes, with the focus according to Mr Darling being on supporting growth.
The main tax measures can be summarised as follows:
VAT
- The standard rate of VAT will as planned return to 17.5% on 1 January 2010.
- No further changes to the VAT regime are expected.
Corporation Tax
- The reduced rate of corporation tax of 21% for small companies will remain in place with the planned increase being deferred.
- Following consultation with business, a reduced 10% rate of corporation tax will be introduced for income from patents in the UK.
- There will be no windfall tax on profits derived from banking activities.
Income Tax
- There will be no change to income tax rates or thresholds next year, however there will be some changes to what can be deducted for tax purposes.
- From April 2010 the point at which people start paying income tax at the 40% rate will be frozen for one year. However no-one with income below £43,000 will be affected by the change.
- Employer, employee and self-employed rates of National Insurance will be increased by half a percent from April 2011. However, no-one earning under £20,000 will pay any more national insurance contributions as a result.
Stamp Duty
- The stamp duty holiday, which exempted residential properties costing less than £175,000 from stamp duty, will finish at the end of this month as expected.
Inheritance tax
- Married couples can continue to combine their inheritance tax allowances; however the individual allowances will be frozen at £325,000 for the next year.
Other announcements
- A new levy of 50% will apply to individual discretionary bonuses paid by banks to their employees with effect from today where the bonus is above £25,000. The 50% levy will be paid by the bank and not the bank employee. The employee will be also be taxed as normal on the gross bonus received.
- Pension tax relief will be cut for people with incomes over £150,000 and employer pension contributions will be included in the definition of income for this tax measure. Individuals with income below £130,000 will not be affected.
- The 'Time to Pay' scheme which allows businesses to spread their tax payments over a timetable they can afford is to be extended for as long as is needed.
- Electric cars will be exempt from company car tax for 5 years and electric vans will be entitled to a 100% first year capital allowance.
Full details can be found on the pre budget report section of the HMRC website which can be accessed here