Wettone Matthews

WE HAVE MOVED!

twettone@wmcca.co.uk (Tim Wettone) — Mon, 05 Jul 2010 09:07:00 -0700

We are pleased to announce that we have relocated to new office premises as from Monday 5th July 2010.

The new address is Market House, 21 Lenten Street, Alton, Hampshire GU34 1HG.

After having been located at Westbrooke House in Alton for over 30 years, it was time to move to larger and more modern premises that are better suited to our changing needs.

There is on-site parking for staff and clients, so it will now be FREE to visit us.

We have had to change our telephone and fax numbers, so please call us on 01420 543001 in future. Calls made to our old number should be greeted by a recorded message advising the new number.

We look forward to welcoming our clients and friends at our new home.

Emergency Budget 2010

twettone@wmcca.co.uk (Tim Wettone) — Wed, 23 Jun 2010 14:06:00 -0700

In the lead-up to the 6 May General Election, the Conservatives announced that if victorious they would hold an ‘Emergency Budget’ within 50 days of taking office, primarily to tackle the UK’s economic deficit. Other measures promised in the Tory manifesto included plans to cut inheritance tax and a new tax break for married couples.

In the event, the hung parliament and the subsequent formation of the Coalition Government meant that any Conservative and Liberal Democrat pre-election pledges were superseded by a ‘Programme for Government’, which included elements from the manifestos of both parties, as well as numerous compromises and some new policies.

The 50-day Emergency Budget, however, survived the negotiations. Along with the Programme for Government and the autumn Spending Review, Chancellor George Osborne’s statement on 22 June could indicate the direction of the Coalition’s policy for years to come.

About this Report

This Report was written immediately after the Chancellor delivered his Budget speech. It is intended to be a general overview of the main announcements — please contact us for advice specific to your circumstances.

Please note: This Report is intended as a general information guide only. It is based on the press releases and other documents available on 22 June 2010. It is not intended as a complete summary of every measure. Every effort is made to ensure accuracy, but no liability is accepted for any action taken or refrained from in consequence of its contents. Always seek professional advice before acting.

Budget Highlights
Business Tax & Investment Incentives
Capital Taxes
Duties
National Minimum Wage
Income Tax & Personal Savings
Value Added Tax
Tax and Travel
National Insurance
Other Measures Announced
Tax Calendar

Budget Highlights

Osborne unveils 'tough' Budget but declares Britain 'open for business'

Billed as a 'tough but fair' Budget, Chancellor George Osborne has announced his plans to tackle the UK's record deficit while sustaining the economy.

Setting out the Government's target of bringing the current structural deficit into balance by 2016, the Chancellor said that it was on course to meet this goal a year early. However, the newly created Office for Budget Responsibility has revised down its forecasts for economic growth in the short term, cutting them from 1.3% to 1.2% for 2010, and from 2.6% to 2.3% in 2011. Public sector net borrowing is expected to be £149 billion this year, falling to £60 billion in 2013/14.

In order to meet the fiscal mandate, the Chancellor announced a combination of tax rises and spending cuts. An increase in VAT was widely expected in the so-called 'unavoidable Budget', and it was confirmed that VAT will rise from 17.5% to 20% with effect from 4 January 2011. Capital gains tax will also rise from 18% to 28% for higher rate taxpayers, from 23 June 2010.

Declaring Britain to be 'open for business', the Chancellor outlined plans to reform the corporation tax regime, with the main rate being reduced from 28% to 27% on 1 April 2011, followed by reductions of 1% a year thereafter until it reaches 24% in 2014. The rate for small companies will also be reduced from 21% to 20% from April 2011.

Meanwhile, the threshold for employer national insurance contributions will be increased by £21 a week above indexation. New businesses outside London, the East and the South East of England will enjoy a national insurance 'holiday' of up to £5,000 for the first 10 employees.

Wide-ranging changes to the welfare system will also result in savings to the tune of £11 billion by 2014/15, with cuts in Child Tax Credit for households with income of over £40,000 a year coming into force next year, together with new limits on housing benefit. Child Benefit will be frozen at its current rate for the next three years.

In a bid to protect lower earners, the basic personal income tax allowance will be raised from £6,475 to £7,475 from April 2011. Pensioners will see the restoration of the earnings link from next April. The banking industry, meanwhile, will share in the squeeze by means of a bank levy, which from January 2011 will generate an estimated £2 billion of revenue each year.

Budget Highlights

VAT to rise to 20% from January 2011
Personal allowance rising to £7,475 in April 2011
Tax Credits cut for households earning over £40,000
New 28% top rate of capital gains tax
Corporation tax cut by 1% a year to reach 24% in 2014

The deficit

In recent years, Government spending has consistently exceeded Government receipts, resulting in an annual deficit and a spiralling national debt. In the March 2010 Budget the deficit was estimated at £163.4 billion, though this was revised downwards by the Office for Budget Responsibility.

In his last Budget, the then Chancellor Alistair Darling announced plans to halve the UK deficit within four years, but not to make spending cuts within the 2010/11 financial year. However, following the General Election and the emergence of the Coalition, tackling the deficit has become the top Government priority, with Chancellor George Osborne committed to an immediate £6.2 billion of cuts to ‘waste and low value programmes.’

This new direction, according to Prime Minister David Cameron, ‘marks an end to the years of recklessness and big government and the beginning of the years of responsibility and good government.'* *

Business Tax and Investment Incentives

Corporation Tax

Corporation tax rates and bands are as follows:

Financial Year to	31 March 2012	31 March 2011
Taxable profits
First £300,000	20%	21%
Next £1,200,000	28.75%	29.75%
Over £1,500,000	27%	28%

The main rate of corporation tax will be reduced to 27% for the financial year commencing 1 April 2011 (FY 2011). There will be further reductions (by 1% per annum) to take the rate down to 24% by 1 April 2014. The small profits rate will be reduced to 20% for FY 2011.

Capital allowances

The rates of writing down allowances (WDAs) for new and unrelieved expenditure on plant and machinery will be reduced from 20% to 18% per annum for expenditure allocated to the main rate pool, and from 10% to 8% per annum for expenditure allocated to the special rate pool. This will have effect for chargeable periods ending on or after 1 April 2012 for businesses within the charge to corporation tax and on or after 6 April 2012 for businesses within the charge to income tax.

The Annual Investment Allowance (AIA) will be reduced from the current limit of £100,000 to a new limit of £25,000. This will have effect from April 2012.

Consortium relief

In certain circumstances, a member of a consortium may transfer its share of the consortium’s unused losses to another member of its group. The member making the transfer is known as the ?link company? and under current rules it must be UK resident. For accounting periods commencing on or after the date the legislation is published, the rules will be extended to allow any company established within the European Economic Area to be a link company.

The legislation will also provide an additional test for determining the maximum amount of losses that may be claimed from a consortium company. This test will be based on the proportion of voting rights and the extent of control the member holds in the consortium.

Corporation tax reform

The Government is to consult on:

changes to the rules for foreign branches
the reform of the controlled foreign company (CFC) rules
the taxation of intellectual property
the support research and development (R&D) tax credits provide for innovation.

It also intends to simplify the capital gains rules for groups of companies.

In the autumn the Government will set out a more detailed programme for the reform of the whole corporate tax system.

Business finance

A new Enterprise Capital Fund of £37.5 million will be introduced to provide additional equity finance for small businesses.

The Enterprise Finance Guarantee will be increased to provide £200 million in additional lending for small businesses until 31 March 2011.

Anti-avoidance

Anti-avoidance legislation will be introduced in respect of:

use of authorised investments funds (AIFs)
the ‘derecognition’ of income of a loan or derivative.

Carers

The Chancellor has confirmed the Government’s intention to legislate a number of changes previously announced, affecting:

special guardians orders and certain kinship carers — measures to ensure that payments to qualifying guardians will be exempt from income tax
shared lives carers, including adult placement carers, staying put carers and certain kinship carers — to allow qualifying shared lives carers to claim the same income tax relief as foster carers. The new relief will be known as the qualifying care relief
individuals who set aside part of their house exclusively for use under a local authority adult placement scheme — to ensure that entitlement to private residence relief (PRR) is preserved where an adult placement carer uses part of their home exclusively for the purposes of their business as a carer; and
foster carers and shared lives carers — to correct technical anomalies in the special capital allowances rules for foster carers, to ensure that the rules operate as intended when individuals start, or finish, qualifying or electing for foster-care relief.

Office of Tax Simplification

The Government has announced its intention ‘to restore the UK tax system’s reputation for predictability, stability and simplicity’. It has published a discussion document setting out a number of proposals designed to improve the framework for developing, legislating and implementing tax policy.

The Government has also confirmed its intention to create an independent Office of Tax Simplification. More details about this will be published shortly.

The Government also proposes a review of IR35 and small business tax. Further details will be released after the Budget.

Capital taxes

Capital Gains Tax (CGT)

The annual exempt amount remains at £10,100 for 2010/11.

For gains arising up to and including 22 June 2010, the rate of CGT is 18%. For gains arising on or after 23 June 2010 the rate remains 18% for those whose total taxable income and gains are less than the income tax basic rate upper limit. For gains, including parts of gains, above that limit, the rate is 28%. Gains arising before 23 June 2010 are not taken into account in determining the rate (or rates) at which gains arising on or after 23 June will be charged.

The Chancellor also announced that taxpayers will be able to deduct losses and the annual exempt amount in the way which minimises the tax payable.

Entrepreneurs' Relief

Entrepreneurs’ Relief has until now reduced the effective rate of CGT charged on certain qualifying gains to 10%, subject to a lifetime limit. The lifetime limit was increased to £2 million with effect from 6 April 2010.

The Chancellor announced that for gains arising on or after 23 June 2010 the rate of CGT on gains qualifying for Entrepreneurs’ Relief would be 10%, and that with effect from the same date the lifetime limit would be increased to £5 million.

Trusts

The rate of CGT for trusts and personal representatives is also increased to 28%, for gains arising on or after 23 June 2010, except where Entrepreneurs’ Relief applies.

Inheritance tax (IHT)

The IHT threshold is frozen at £325,000 from 2010/11 to 2014/15.

The rate of IHT remains 20% for lifetime transfers and 40% for death estates (including transfers within seven years before death brought back into the estate for the purpose of calculating the tax due at death).

Duties

Aviation taxation - per plane duty

The Government will explore changes to aviation tax, including switching from a per-passenger to a per-plane duty. Major changes will be subject to consultation.

Cider duty

The 10% above inflation increase in cider duty announced at the March 2010 Budget is being reversed so that cider duty increases match those of other alcohol products. However, a review of alcohol taxation due in the autumn may amend the definition of ‘cider’.

Landline duty

The duty on landlines (local loops) announced in the Pre-Budget Report 2009 will not proceed.

National Minimum Wage (NMW)

From 1 October 2010 the main adult rate of the NMW will rise to £5.93 per hour.

Currently, those aged 22 and over are entitled to a minimum hourly rate of £5.80. With effect from 1 October 2010, 21 year olds will also be included in this rate.

In addition, apprentices will become entitled to a minimum wage rate for the first time in October, following the Government’s acceptance of recommendations from the Low Pay Commission. The new wage will apply to apprentices who are under the age of 19, or those aged 19 and over who are in the first year of their apprenticeship.

The current and future NMW rates are set out in the table below.

Financial Year to	22 and over*	18-21*	16 and 17	Apprentices
From 1 October 2009	£5.80	£4.83	£3.57	n/a
From 1 October 2010	£5.93	£4.92	£3.64	£2.50

*Main rate applies to those aged 21 and over from 1 October 2010.

Income Tax and Personal Savings

Income tax rates

From 6 April 2010 income in excess of £150,000 is subject to a new 50% additional rate of income tax (42.5% on dividends).

		2010/11
Basic rate band — income up to		£37,400
Starting rate for savings		10%*
Basic rate		20%
Dividend ordinary rate		10%
Higher rate — income over		£37,400
Higher rate		40%
Dividend upper rate		32.5%
Additional rate — income over		£150,000
Additional rate		50%
Dividend additional rate		42.5%
*Starting rate is for savings income up to the starting rate limit of £2,440 within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income.

The Chancellor announced that the basic rate band for 2011/12 will be reduced so that higher rate taxpayers do not benefit from the increase in the personal allowance. The exact figure will be announced later.

Personal allowances (ages are as at the end of the tax year)

Personal allowances		2010/11
Personal allowances (PA)	under 65	£6,475
	65 to 74	£9,490
	75 and over	£9,640
Married couple's allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%)		£6,965

Age-related allowances are reduced by £1 for every £2 that adjusted net income exceeds £22,900, to a minimum PA of £6,475.

The MCA is reduced by £1 for every £2 by which the income of the spouse or civil partner with the most income exceeds £22,900, subject to a minimum of £2,670 (highest income counts for the reduction).

Where income exceeds £100,000, the PA, including the minimum age-related allowances, is reduced by £1 for every £2 that net adjusted income exceeds £100,000.

For 2011/12, the PA for those aged under 65 will be increased to £7,475. The basic rate limit will be reduced so that higher rate tax payers do not benefit from the increase in the PA.

Individual Savings Accounts (ISAs)

Changes to the way the annual ISA limit is set were announced on 24 March 2010, but were not included in the original 2010 Finance Act. The Chancellor has confirmed those changes will be carried through.

Furnished Holiday Lettings (FHL)

The Chancellor announced that the proposed withdrawal of the FHL rules from 6 April 2010 will not take effect.

A consultation will take place over the summer of 2010 about plans to change the tax rules for FHL from April 2011. The consultation will specifically look at:

ensuring the FHL rules apply equally to properties in the European Economic Area (EEA)
increasing the number of days that qualifying properties have to be available for, and actually let as, commercial holiday letting; and
changing the way in which FHL loss relief is given.

Non-domiciliaries

As announced in the Coalition Agreement, the Government is to review the taxation of non-domiciled individuals.

Life insurance deficiency relief

The Government will not extend life insurance deficiency relief to the additional rates of tax. Instead, relief will reduce tax on income subject to the higher rate and dividend upper rate, only.

Managed Payment Plans

The Chancellor has announced a deferral, from the proposed date in 2011, of the implementation of Managed Payment Plans (MPPs).

MPPs will allow taxpayers to pay self-assessed income tax and corporation tax in a series of monthly payments either side of the theoretical due date.

Income tax adjustments between settlors and trustees

A measure announced on 24 March 2010, which would require settlors to pay to the trustees of trusts certain repayments of tax received on or after 6 April 2010 was not enacted in the original 2010 Finance Act. This will be legislated for in the next finance bill.

Pension savings

The Government proposes cancelling the introduction of the high income excess relief charge, which would apply from 6 April 2011, and replacing it, principally, with a reduced annual allowance as a means to restrict pensions tax relief.

The requirement to buy an annuity by age 75 is to end, with effect from 2011/12. In the interim, the age by which an annuity must be bought or an income secured is increased, with effect from 22 June 2010, to 77, so long as the individual had not reached the age of 75 before 22 June 2010. The same changes will also apply for inheritance tax (IHT) purposes to members who die on or after 22 June 2010.

Value Added Tax

From	4 Jan 2011	1 Jan 2010
Standard rate	20%	17.5%
VAT fraction	1/6	7/47
Reduced Rate	5%	5%
Taxable Turnover Limits
Registration - last 12 months or next 30 days over	£70,000 from 1 April 2010
Deregistration - next 12 months under	£68,000 from 1 April 2010
Annual accounting scheme	£1,350,000
Cash accounting scheme	£1,350,000
Flat-rate scheme	£150,000

Change to the standard rate of VAT

The standard rate of VAT will increase to 20% on 4 January 2011.

Zero rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at the reduced 5% rate, such as domestic fuel and power, are not affected by this change.

There are no changes to the Cash Accounting or Annual Accounting Schemes.

Anti-forestalling legislation will be included in the Finance Bill 2010 to prevent the 17.5% rate applying to supplies of goods or services that are provided on or after 4 January 2011, subject to certain conditions.

VAT flat rate scheme

As a consequence of the increase of the standard rate of VAT from 17.5% to 20%, the flat rate scheme sector flat rates have also been recalculated to reflect the increase.

The VAT flat rate scheme was introduced in 2002 with the objective of simplifying VAT for businesses with an annual turnover up to £150,000, tax exclusive. That threshold remains unchanged.

Lennartz accounting

Under existing arrangements, VAT on immovable property, boats and aircraft is recoverable upfront and in full on both the business and private use of the asset (subject to any partial exemption restriction). VAT is then payable over subsequent years in respect of the private use of the asset. This is known as ‘Lennartz’ accounting. The changes introduced in this Budget will ensure that VAT recovery is restricted only to the business use of the asset, excluding any private use by the taxpayer or the taxpayer’s staff. Changes to the capital goods scheme will also be introduced so that it will take account of changes in private use over subsequent years. The changes will have effect on and after 1 January 2011.

Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO2 emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage' as shown in the table below. The first two lines of figures in the table relate to qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2010/11 increases from £16,900 to £18,000.

The percentages are reduced for cars (except QUALECs) that can be driven on alternative fuels by:

2% for cars manufactured to be capable of being run on E85 fuel
2% for bi-fuel cars or those which run on LPG only
3% for hybrid electric and petrol cars.

For cars which cannot produce CO2 engine emissions under any circumstances when driven, the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% for 5 years from 6 April 2010.

Future changes

With effect from 6 April 2011, the list price cap of £80,000 is being withdrawn. This will increase substantially the tax charge for drivers of very expensive cars. For example for a car with a list price of £170,000 and CO2 emissions of 320g/km, the annual taxable benefit will increase from £28,000 to £59,500.

For each of the two next tax years, the CO2 emissions thresholds will be shifted down by 5g/km and from 6 April 2012 the table of tax bands will be extended down to a new 10% band for cars emitting up to 99g/km. This will replace the existing 10% band, so that QUALECs will no longer exist as a separate category.

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge.

The table shows the VAT chargeable for quarters commencing on or after 1 May 2010. The last column takes account of the change in the standard rate of VAT from 17.5% to 20% with effect from 4 January 2011.

CO₂ emissions (g/km)	Appropriate percentage		Quarterly VAT
			Fuel scale charge £	VAT on charge
	Petrol %	Diesel %	Fuel scale charge £	£ (17.5%)	£ (20%)
Up to 75	5	8	141	21.00	23.50
76 - 120	10	13	141	21.00	23.50
121 - 134	15	18	212	31.57	35.33
135 - 139	16	19	227	33.80	37.83
140 - 144	17	20	241	35.89	40.17
145 - 149	18	21	255	37.97	42.50
150 - 154	19	22	269	40.06	44.83
155 - 159	20	23	283	42.14	47.17
160 - 164	21	24	297	44.23	49.50
165 - 169	22	25	312	46.46	52.00
170 - 174	23	26	326	48.55	54.33
175 - 179	24	27	340	50.63	56.67
180 - 184	25	28	354	52.72	59.00
185 - 189	26	29	368	54.80	61.33
190 - 194	27	30	383	57.04	63.83
195 - 199	28	31	397	59.12	66.17
200 - 204	29	32	411	61.21	68.50
205 - 209	30	33	425	63.29	70.83
210 - 214	31	34	439	65.38	73.17
215 - 219	32	35	454	67.61	75.67
220 - 224	33	35	468	69.70	78.00
225 - 229	34	35	482	71.78	80.33
230 and above	35	35	496	73.87	82.67

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates at the time of the Budget are as follows:

Vehicle	First 10,000 miles	Thereafter
Car / Van	40p	25p
Motorcycle	24p	24p
Bicycle	20p	20p

Car - fuel only advisory rates
Engine Capacity	Petrol	Diesel	LPG
Up to 1400cc	12p	11p	8p
1401 - 2000cc	15p	11p	10p
Over 2000cc	21p	16p	14p

The fuel only advisory rates relate to company cars only. They can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys.

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

Car costs — Vehicle Excise Duty (VED) rates

Vehicle Excise Duty ('Car Tax') rates also reflect emissions, with lower scale rates for cars using alternative fuels. The following table shows the rates which apply from 1 April 2010 for cars registered on or after 1 March 2001:

VED Band	CO₂ emissions (g/km)	First year rate	Standard rate
VED Band	CO₂ emissions (g/km)	First year rate	Petrol & Diesel	Alternative fuels
A	Up to 100	£0	£0	£0
B	101 – 110	£0	£20	£10
C	111 – 120	£0	£30	£20
D	121 – 130	£0	£90	£80
E	131 – 140	£110	£110	£100
F	141 – 150	£125	£125	£115
G	151 – 165	£155	£155	£145
H	166 – 175	£250	£180	£170
I	176 – 185	£300	£200	£190
J	186 – 200	£425	£235	£225
K*	201 – 225	£550	£245	£235
L	226 – 255	£750	£425	£415
M	Over 255	£950	£435	£425
* includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £550 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge	Van	Fuel	Total
Tax (20% taxpayer)	£600	£110	£710
Tax (40% taxpayer)	£1,200	£220	£1,420
Tax (50% taxpayer)	£1,500	£275	£1,775
Employer’s Class 1A NICs	£384	£70.40	£454.40

The flat rate of £3,000 is reduced to nil for vans emitting zero CO₂. There will be no fuel benefit for such vans.

National Insurance Contributions (NICs)

		2010/11
Class 1 (not contracted out)		Employer	Employee
Payable on weekly earnings of:
below £97 (lower earnings limit)		Nil	Nil
£97 to £110 (earnings threshold)		0%	0%
£110.01 - £770 (upper accrual point)		12.8%	11%
£770.01 - £844 (upper earnings limit)		12.8%	11%
Over £844		12.8%	1%
Over state retirement age, the employee contribution is generally nil
Class 1A	on relevant benefits	12.8%	Nil
Class 2	Self employed	£2.40 per week
	Limit of net earnings for exception	£5,075 per annum
Class 3	Voluntary	£12.05 per week
Class 4*	Self employed on profits
	£5,715 - £43,875	8%
	Excess over £43,875	1%
*Exemption applies if state retirement age was reached by 6 April 2011 (6 April 2010)

Changes to NICs — What lies ahead?

As previously announced, from April 2011 rates will rise by 1% to:

Employee Class 1	12%
Employer Class 1 and Class 1 A/B	13.8%
Self-employed Class 4	9%
Class 1/4 additional rate	2%

The March Budget raised the employees' earnings threshold and lower profit limits. The Emergency Budget announced a rise in the employers' earnings threshold of £21 a week above indexation, and a reduction in the upper earnings limit to maintain the alignment with the basic rate income tax limit.

Regional employer NICs holiday for new businesses

Details of a scheme to assist new businesses in targeted areas of the UK will be announced soon. Within a three year qualifying period, employers eligible for the scheme will not have to pay the first £5,000 of Class 1 employer NICs due in the first 12 months of employment. This will apply for each of the first 10 employees hired in the first year of business. Subject to meeting the necessary legal requirements, the scheme is intended to start no later than September 2010. Any new business set up from 22 June 2010 which meets the criteria set out in the forthcoming announcement will be eligible for the scheme.

The targeted countries and regions will be: Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.

Other measures announced

Child Trust Fund

The Coalition has already announced its intention to reduce and then stop all government contributions to Child Trust Funds. Subject to legislation, the Government intends to reduce government contributions at birth, and to stop government contributions at age 7, from August 2010. It is intended that HMRC will stop issuing new Child Trust Fund vouchers from 1 January 2011.

Until legislation is in place Child Trust Funds will continue as usual.

Saving Gateway

The proposed Saving Gateway will not be introduced in July 2010.

Bank Levy

A levy based on banks’ balance sheets will be introduced from 1 January 2011, intended to encourage banks to move to less risky funding profiles. Final details will be published later this year, following consultation.

Health in Pregnancy Grant

The Health in Pregnancy Grant is a £190 one-off payment to all expectant mothers that is made irrespective of income. The Government proposes to abolish the grant from 1 January 2011. Women who reach the 25th week of pregnancy before 1 January 2011 will still be entitled to the grant providing they satisfy the conditions.

Penalties for late filing of returns and payment of tax

Legislation will be introduced in the autumn that will bring VAT, insurance premium tax, aggregates levy, climate change levy, landfill tax and excise duties within the late filing and late payment penalty regimes. This will complete the legislative programme started in Finance Act 2009.

PAYE was the first tax to which the late payment penalties regime applied. This started in April 2010.

Council Tax

Local authorities will be encouraged to implement a freeze in council tax in England in 2011/12. The Government will clarify in due course the terms under which local authorities that commit to freeze or reduce their council tax will be compensated.

2010/11 Tax Calendar

April 2010
5	Last day of 2009/10 tax year. Deadline for 2009/10 ISAs. Last day to make disposals using the 2009/10 CGT exemption. Last date for contracting back into the State Second Pension for 2009/10.
14	Due date for income tax for the CT61 period to 31 March 2010.
19/22	Quarter 4 2009/10 PAYE remittance due.
20	Interest will begin to accrue on unpaid PAYE/NI for 2009/10.
30	Normal annual adjustment for VAT partial exemption calculations (monthly returns).
May 2010
3	Quarterly submission date of P46 (Car) for quarter to 5 April.
19	Last day for filing forms P14, P35, P38, and P38A - 2009/10 PAYE returns - without incurring penalties.
31	Last day to issue 2009/10 P60s to employees.
June 2010
30	End of CT61 quarterly period. Last day for UK businesses to reclaim EC VAT chargeable in 2009. Annual adjustment for VAT partial exemption calculations (March VAT year end).
July 2010
6	Deadline for submission of Form 42 (transactions in shares and securities). Deadline for submission of EMI40 (EMI Annual Return) File Taxed Award Scheme Returns, file P11Ds, P11D(b)s and P9Ds. Issue copies of P11Ds or P9Ds to employees.
14	Due date for income tax for the CT61 period to 30 June 2010.
19/22	Quarter 1 2010/11 PAYE remittance due. Final date for payment of 2009/10 Class 1A NICs.
31	Second self assessment payment on account for 2009/10. Annual adjustment for VAT partial exemption calculations (April VAT year end). Liability to 2nd £100 penalty arises for 2009 Tax Return still not filed. 5% surcharge on any tax unpaid for 2008/09. Deadline for tax credit Annual Declaration (if estimated, final figures required by 31 January 2011).
August 2010
2	Quarterly submission date of P46 (Car) for quarter to 5 July.
31	Annual adjustment for VAT partial exemption calculations (May VAT year end).
September 2010
30	End of CT61 quarterly period.
October 2010
1	Due date for payment of Corporation Tax for period ended 31 December 2009.
5	Individuals/trustees must notify HMRC of new sources of income/chargeability in 2009/10 if a Tax Return has not been received.
14	Due date for income tax for the CT61 quarter to 30 September 2010.
19/22	Quarter 2 2010/11 PAYE remittance due.
31	Last day to file 2010 paper Tax Return.
November 2010
1	Please ensure you are retaining your documents for the 2011 Tax Return.
2	Quarterly submission date of P46 (Car) for quarter to 5 October.
December 2010
30	Last day to file your 2010 Tax Return electronically if you wish to have a 2009/10 balancing payment of less than £2,000 collected through your 2011/12 PAYE code.
31	Last day for non-EC traders to reclaim recoverable UK VAT suffered in the year to 30 June 2010. End of relevant year for taxable distance supplies to UK for VAT registration purposes. End of relevant year for cross-border acquisitions of taxable goods in the UK for VAT registration purposes. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 December 2009.
January 2011
1	Due date for payment of Corporation Tax for period ended 31 March 2010.
4	Standard rate VAT increases to 20%.
14	Due date for income tax for the CT61 quarter to 31 December 2010.
19/22	Quarter 3 2010/11 PAYE remittance due.
31	First self assessment payment on account for 2010/11. Capital gains tax payment for 2009/10. Balancing payment - 2009/10 income tax/Class 4 NICs. Last day to renew 2010/11 tax credits. Deadline for amending 2008/09 Tax Return. Last day to file the 2010 Tax Return online.
February 2011
1	£100 penalty if 2010 Tax Return not yet filed. Additional penalties may apply for further delay. Interest starts to accrue on 2009/10 tax not yet paid.
2	Quarterly submission date of P46 (Car) for quarter to 5 January.
14	Last date (for practical purposes) to request NIC deferment for 2010/11.
28	Last day to pay any balance of 2009/10 tax and Class 4 NICs to avoid an automatic 5% surcharge.
March 2011
31	End of Corporation Tax financial year. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 March 2010.

Budget 2010 report

twettone@wmcca.co.uk (Tim Wettone) — Thu, 25 Mar 2010 03:03:00 -0700

This Report, which was written immediately after the Chancellor of the Exchequer delivered his Budget Speech, is intended to provide an overview of the latest announcements and recent measures most likely to affect you or your business.

Throughout this guide we have included tips and ideas for effective tax and financial planning, but it is important to remember that this planning should be an ongoing, year-round process, not something that is left until the last minute.

We can help you to reassess your plans regularly, and adapt them as your personal and business circumstances change. With our help, you can plan for a rewarding and financially secure future.

Please note: while most taxation changes take effect from the start of the financial year, or tax year, some may not take effect until 2011, or later. Where relevant, details of these changes have been included in this Report. Throughout the Report, 'HMRC' refers to HM Revenue & Customs.

Budget Highlights
Business Tax & Investment Incentives
Capital Taxes
Duties
Income Tax & Personal Savings
Value Added Tax
Tax and Travel
National Insurance
Other Measures Announced
Tax Calendar

Budget Highlights

Pre-election Budget 'to support recovery and tackle the deficit'

In his last Budget before a much-anticipated General Election, and with the UK emerging from the 'deepest global recession for over 60 years', Chancellor Alistair Darling faced a delicate balancing act as he outlined a series of measures aimed at tackling the deficit while supporting economic recovery.

Reiterating his plan to halve the deficit within four years, the Chancellor revised his borrowing forecast for 2009/10 downwards from £178 billion to £167 billion, but also downgraded the economic growth forecast for 2011 to 3-3.5%.

Among the key measures announced was support for first time buyers, in the form of a two year stamp duty land tax relief on residential properties costing less than £250,000. This will be offset by a new 5% rate for properties worth over £1 million. Meanwhile, the inheritance tax threshold has been frozen for a further four years.

A £2.5 billion small business package aimed at boosting skills and innovation was also unveiled, with a temporary increase in small business rate relief taking effect from October, in addition to a doubling of the Annual Investment Allowance and the Entrepreneurs' Relief lifetime limit.

Revealing that the one-off tax on bank bonuses has raised £2 billion, Darling pledged support for a global tax on bank transactions and announced that UK citizens will be guaranteed the right to a basic bank account.

The 3p rise in fuel duty scheduled for April will now be phased in between April and January 2011. Duty on wine, beer and spirits will rise by 2% a year until 2013, while duty on cider will increase by 10% and tobacco duty will rise by 1%.

Other measures include a new £2 billion investment bank to back low-carbon industries, funding for 20,000 new university places, further measures to tackle tax avoidance, and an extension of the higher winter fuel allowance rate for another year.

Budget Highlights

SDLT threshold raised for first time buyers
Increase in small business rate relief
Annual Investment Allowance doubled
Entrepreneurs' Relief doubled
IHT threshold frozen until 2015
50% income tax rate confirmed

Business Tax and Investment Incentives

Corporation Tax

Corporation tax rates and bands are as follows:

Financial Year to	31 March 2011	31 March 2010
Taxable profits
First £300,000	21%	21%
Next £1,200,000	29.75%	29.75%
Over £1,500,000	28%	28%

Capital allowances

The Annual Investment Allowance (AIA) will be increased from the current limit of £50,000 to a new limit of £100,000. This will have effect for qualifying expenditure incurred on or after 1 April 2010 for corporation tax and on or after 6 April 2010 for income tax.

A 100% first year allowance will be introduced for business expenditure on new and unused (not second hand) zero-emission vehicles. The vehicles will need to be of a design primarily suited to the conveyance of goods or burden. For corporation tax the expenditure must be incurred on or after 1 April 2010 and before 1 April 2015, and for income tax it must be incurred on or after 6 April 2010 and before 6 April 2015.

All expenditure on cushion gas, incurred on or after 1 April 2010, will be treated as special rate expenditure qualifying for writing down allowances at 10% per year.

Loans to participators

Legislation will be introduced that will deny a corporation tax deduction for the amount of the release or write-off of a loan or advance of money made by a close company to a participator (or an associate of a participator). This has effect for debt (or part debt) releases or write-offs on or after 24 March 2010.

PAYE schemes

Legislation will be introduced in Finance Bill 2010 to allow HMRC to require a financial security from employers where amounts due under PAYE or NICs obligations are seriously at risk. This is likely to affect those employers who have a history of serious non-compliance in terms of paying late or not paying. The amount of security will be set by HMRC in light of the potential tax liability.

Employer-supported childcare

The conditions for exemption from the chargeable benefit for employer-supported childcare, provided in the form of childcare vouchers or directly contracted childcare, are to be relaxed. The amendments will have retrospective effect for the tax year 2005/06 and subsequent years. This relaxation is to be introduced in order to clarify the position of employers with employees at or near the National Minimum Wage.

Real Estate Investment Trusts (REITs)

UK REITs will be allowed to issue stock dividends in lieu of cash dividends in meeting the requirement to distribute 90% of the profits from the property rental business of the REIT. The legislation will have effect for property income distributions made on or after Royal Assent.

Share schemes

HMRC will now be able to withdraw approval of a Share Incentive Plan (SIP) where alterations to share capital or changes in rights attaching to shares materially affect the value of participants’ plan shares. In addition, corporation tax deductions will not be allowed where companies pay money to SIP trustees to buy shares from directors/shareholders, but no real value is transferred to employees under the SIP. These measures will have effect in relation to payments and alterations made on or after 24 March 2010.

Legislation will be introduced to counter avoidance arrangements which are being used to circumvent the financial limit in Company Share Option Plans (CSOPs). CSOP options granted on or after 24 March 2010 can no longer be over shares in a company which is under the control of a listed company.

Online services

By the end of 2011, HMRC will:

personalise www.businesslink.gov.uk for those starting up in business and enhance online services for all SMEs, providing better access to relevant tax guidance and flexible tax payment plans to help businesses manage their cash flow
help start-ups and new employers by introducing a single interactive form to enable businesses to register for multiple taxes online and to authorise tax agents
provide an online facility that reduces the need for businesses, or their agents, to provide the same information to HMRC multiple times and allows them a single online view of current tax liabilities or repayments due.

Small business rate relief

The Government is to introduce a temporary increase in the level of small business rate relief, so that eligible small businesses occupying properties with rateable values up to

£6,000 will pay no business rates for one year from October 2010. In addition, small businesses benefiting from rate relief taper (rateable values up to £12,000) will receive significant reductions.

Bank payroll tax

Following the announcement in the 2009 Pre-Budget Report, legislation in Finance Bill 2010 will introduce the bank payroll tax. The tax applies, broadly, to banks and building societies on awards of bonuses over £25,000 made to, or in respect of, certain of its employees in the period from 9 December 2009 to 5 April 2010. It will be chargeable at a rate of 50% on the aggregate excess of bonuses of £25,000 or more awarded in the period. There will be no change in the tax treatment of bonuses received by individuals.

The principal changes to the draft legislation already published are:

clarification of the scope of the legislation in connection with when relevant remuneration is taken to be 'awarded' during the chargeable period
clarification of the scope of the legislation in connection with the definition of 'taxable company'
introduction of a 60 day rule for relevant banking employees
inclusion of detailed machinery provisions for the assessment and the collection of bank payroll tax. These include provisions for penalties and interest.

Capital taxes

Capital Gains Tax (CGT)

The annual exempt amount is £10,100 for individuals (£5,050 for most trustees) for 2010/11.

The rate of CGT remains 18% with Entrepreneurs’ Relief potentially reducing the effective rate of tax on qualifying gains to 10%.

Entrepreneurs' Relief

With effect from 6 April 2010, the Chancellor announced an increase in the lifetime limit for Entrepreneurs’ Relief to £2 million.

The new limit will apply only to disposals on or after 6 April 2010. Where individuals or trustees make qualifying gains above the previous £1 million limit before 6 April 2010, no additional relief will be allowed for the excess above the old limit. But if they make further qualifying gains after 5 April 2010, they will be able to claim relief on up to a further £1 million of those additional gains, giving relief on accumulated qualifying gains up to the new limit of £2 million.

Inheritance tax (IHT)

The IHT allowance (nil-rate band) has been frozen at £325,000 for 2010/11 to 2014/15. The transferability of the allowance gives an effective joint tax-free maximum of £650,000 for married couples and civil partners.

The rate of IHT remains 20% for chargeable lifetime transfers and 40% for death estates (including transfers within seven years before death brought back into the estate for the purpose of calculating the tax due at death).

Duties

New rate of stamp duty land tax (SDLT)

A higher SDLT rate of 5% will be introduced for purchases of residential property where the consideration exceeds £1 million.

The new higher rate will apply to residential purchases where the effective date (normally the date of completion) is on or after 6 April 2011.

SDLT for first time buyers

Relief will be available from SDLT for purchases of residential property at up to £250,000 where the purchaser or all the purchasers are first time buyers and intend to occupy the property as their only or main home.

The new relief will be available for residential purchases where the effective date (normally the date of completion) is on or after 25 March 2010 and before 25 March 2012.

Alcohol and tobacco products duty

The duty rates for tobacco products are increased by 1%.

The impact of the changes on retail prices on and after 29 March 2010 for typical alcoholic drinks is equivalent to:

36p on a 70cl bottle of spirits @ 37.5% abv
2p on a pint of beer
5p on a litre of still cider
9p on a 75cl bottle of sparkling cider
10p on a 75cl bottle of wine or made-wine
12p on a 75cl bottle of sparkling wine.

Income Tax and Personal Savings

Income tax rates

In the 2009 Budget the Chancellor announced controversial plans to introduce an additional rate of income tax.

From 6 April 2010 income in excess of £150,000 will be subject to a new 50% top rate of income tax (42.5% on dividends). There is no change to the tax rates and bands for income of up to £150,000.

Income Tax rates		2010/11	2009/10
Basic rate band – income up to		£37,400	£37,400
Starting rate for savings		*10%	*10%
Basic rate		20%	20%
Dividend ordinary rate		10%	10%
Higher rate - income over		£37,400	£37,400
Higher rate		40%	40%
Dividend upper rate		32.5%	32.5%
Additional rate – income over		£150,000	-
Additional rate		50%	-
Dividend additional rate		42.5%	-
*Starting rate is for savings income up to the starting rate limit of £2,440 within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income.
Personal allowances (ages are as at the end of the tax year)		2010/11	2009/10
Personal allowances (PA)	under 65	£6,475	£6,475
	65 to 74	£9,490	£9,490
	75 and over	£9,640	£9,640
Married couple's allowance (MCA)
Either partner born before 6 April 1935		£6,965	£6,965
(relief restricted to 10%)

The amount of the PA remains unchanged for 2010/11 – however:

age-related allowances are reduced by £1 for every £2 that net adjusted income exceeds £22,900, to a minimum PA of £6,475
the married couple’s allowance is reduced by £1 for every £2 by which the income of the spouse or civil partner with the most income exceeds £22,900, subject to a minimum of £2,670 (highest income counts for the reduction)
where income exceeds £100,000, the PA, including the minimum age-related allowances, is reduced by £1 for every £2 that net adjusted income exceeds £100,000

Individual Savings Accounts (ISAs)

From 6 April 2010 the ISA limit will be raised to £10,200, up to £5,100 of which can be saved in cash. The higher limit was available to investors aged 50 and over from 6 October 2009.

From 6 April 2011 and over the course of the next Parliament, the annual ISA limits will increase each year in line with the RPI. The new annual limits will be rounded to the nearest multiple of 120 so that individuals who save monthly will be able to calculate their monthly savings more easily.

The new limits will be calculated by reference to the RPI for the September before the start of the tax year, and HMRC will announce the new limits as soon as possible after the RPI figure is published, and at least four months in advance of the start of the new tax year in which they will apply.

In the event that the RPI is negative, the ISA limits would be unchanged.

As is the case now, following indexation, the cash ISA limit will be half the value of the stocks and shares ISA limit.

Income tax adjustments between settlors and trustees

Settlors (people who set up a trust) may receive repayments of tax on trust income if they are liable to income tax at a lower rate than the trustees. A proposed new measure, to be effective from 6 April 2010, will require settlors to pay any such repayments of tax they receive to the trustees. It is understood that these payments to trustees will be disregarded for inheritance tax purposes.

Life insurance deficiency relief

Individuals may be entitled to the relief if their tax calculation needed when a policy or contract comes to an end gives a negative result rather than a gain, but taxable gains have arisen earlier in the life of the same policy or contract.

At present, a tax reduction may be due for the year in which the policy comes to an end if the individual has income subject to the higher rate and dividend upper rate of tax. New legislation, applying to surrenders on or after 6 April 2010, will extend the relief so that a tax reduction may also be due if the individual has income subject to the additional and dividend additional rates of tax.

This measure also provides that deficiency relief triggered by the surrender of a policy on or after 6 April 2010 may be restricted. The restriction will apply if the main purpose of an individual being a party to arrangements is to secure a tax reduction greater than the income tax due on earlier chargeable events that led to the relief. This provision applies to arrangements made on or after 22 April 2009 that culminate in the surrender of the policy on or after 6 April 2010.

UK charity tax reliefs

Legislation will be introduced in Finance Bill 2010 to extend UK charitable tax reliefs to certain organisations equivalent to UK charities and Community Amateur Sports Clubs in the EU and in the European Economic Area countries of Norway and Iceland, following a judgment in the European Court of Justice in January 2009.

The remittance basis: relevant person

A measure effective from 6 April 2010 will amend the legislation to clarify that a subsidiary of a non-UK resident company which would be a close company if it was resident in the UK will be treated as a relevant person for the purposes of the remittance basis.

Increased penalties for offshore tax evasion

Legislation, to apply for tax periods commencing on or after 1 April 2011, will be introduced in Finance Bill 2010 to provide for larger penalties for taxpayers who fail to provide a full account of their income tax or capital gains tax liabilities, where the failure is linked to an offshore matter.

Where the non-compliance occurs in a jurisdiction which:

has provision to exchange information on savings income automatically with the UK, the penalty percentages will be the same as for non-compliance arising in the UK
has agreed to exchange information with the UK, but does not automatically share that information, the penalty percentages will be 1.5 times those applying for non-compliance arising in the UK
has not agreed to exchange information with the UK, the penalty percentages will be doubled.

Pension savings

Anti-forestalling provisions, restricting higher and additional rate tax relief for higher-earners, will continue to operate through 2010/11.

With effect from 6 April 2011, people with annual income of £150,000 or over but below £180,000 will have their tax relief on pension contributions (including the value of employer contributions for those in employment) reduced gradually from the individual’s marginal rate to the basic rate as income increases. Where income is £180,000 or over, the measure restricts tax relief on pension contributions to the basic rate.

For the purposes of this measure, income is calculated before deduction or relief for pension contributions and charitable donations, and for those in employment, includes the value of any pension benefit funded (or eventually funded) by their employer.

Value Added Tax

From	1 Jan 2010	1 Dec 2008
Standard rate	17.5%	15%
VAT fraction	7/47	3/23
Reduced Rate	5%	5%
Taxable Turnover Limits
Registration - last 12 months or next 30 days over	£70,000 from 1 April 2010
Deregistration - next 12 months under	£68,000 from 1 April 2010
Annual accounting scheme	£1,350,000
Cash accounting scheme	£1,350,000
Optional flat-rate scheme	£150,000

Change of standard rate and impact on flat rate scheme

The standard rate of VAT returned to 17.5% from 1 January 2010. The flat rates were amended on 1 January 2010 to take account of this change.

Tour Operators’ Margin Scheme

From 1 January 2010, some amendments have been made to the Tour Operators’ Margin Scheme to ensure full compliance with EU law.

Partial exemption

From 1 April 2010 the basis on which businesses calculate the amount of VAT they can recover will be simplified.

Option to tax

From 1 April 2010 amendments will be made to simplify the option to tax regime.

Switching to VAT online services

Those with an annual turnover of £100,000 or more (exclusive of VAT) on 31 December 2009 will be sent a letter from HMRC. This letter will explain that VAT returns must be submitted online and paid electronically for all returns starting on or after 1 April 2010. There will be a guide with the letter, which explains how to register and enrol for VAT online services. The requirement to submit VAT returns online and pay electronically also applies to those who register or should have registered for VAT on or after 1 April 2010, regardless of turnover.

Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO₂ emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage' as shown in the table below. The first two lines of figures in the table relate to qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2010/11 increases from £16,900 to £18,000.

The percentages are reduced for cars (except QUALECs) that can be driven on alternative fuels by:

2% for cars manufactured to be capable of being run on E85 fuel
2% for bi-fuel cars or those which run on LPG only
3% for hybrid electric and petrol cars.

For cars which cannot produce CO₂ engine emissions under any circumstances when driven, the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% for 5 years from 6 April 2010.

Future changes

With effect from 6 April 2011, the list price cap of £80,000 is being withdrawn. This will increase substantially the tax charge for drivers of very expensive cars. For example for a car with a list price of £170,000 and CO₂ emissions of 320g/km, the annual taxable benefit will increase from £28,000 to £59,500.

For each of the two next tax years, the CO₂ emissions thresholds will be shifted down by 5g/km and from 6 April 2012 the table of tax bands will be extended down to a new 10% band for cars emitting up to 99g/km. This will replace the existing 10% band, so that QUALECs will no longer exist as a separate category.

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge.

The table shows the VAT chargeable for quarters commencing on or after 1 May 2010.

CO₂ emissions (g/km)	Appropriate percentage		Quarterly VAT
CO₂ emissions (g/km)	Petrol %	Diesel %	Fuel scale charge £	VAT on charge £
Up to 75	5	8	141	21.00
76 - 120	10	13	141	21.00
121 - 134	15	18	212	31.57
135 - 139	16	19	227	33.80
140 - 144	17	20	241	35.89
145 - 149	18	21	255	37.97
150 - 154	19	22	269	40.06
155 - 159	20	23	283	42.14
160 - 164	21	24	297	44.23
165 - 169	22	25	312	46.46
170 - 174	23	26	326	48.55
175 - 179	24	27	340	50.63
180 - 184	25	28	354	52.72
185 - 189	26	29	368	54.80
190 - 194	27	30	383	57.04
195 - 199	28	31	397	59.12
200 - 204	29	32	411	61.21
205 - 209	30	33	425	63.29
210 - 214	31	34	439	65.38
215 - 219	32	35	454	67.61
220 - 224	33	35	468	69.70
225 - 229	34	35	482	71.78
230 and above	35	35	496	21.00

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates at the time of the Budget are as follows:

Vehicle	First 10,000 miles	Thereafter
Car / Van	40p	25p
Motorcycle	24p	24p
Bicycle	20p	20p

Car - fuel only advisory rates
Engine Capacity	Petrol	Diesel	LPG
Up to 1400cc	11p	11p	7p
1401 - 2000cc	14p	11p	8p
Over 2000cc	20p	14p	12p

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

Car costs – Vehicle Excise Duty (VED) rates

VED Band	CO₂ emissions (g/km)	First year rate	Standard rate
VED Band	CO₂ emissions (g/km)	First year rate	Petrol & Diesel	Alternative fuels
A	Up to 100	£0	£0	£0
B	101 – 110	£0	£20	£10
C	111 – 120	£0	£30	£20
D	121 – 130	£0	£90	£80
E	131 – 140	£110	£110	£100
F	141 – 150	£125	£125	£115
G	151 – 165	£155	£155	£145
H	166 – 175	£250	£180	£170
I	176 – 185	£300	£200	£190
J	186 – 200	£425	£235	£225
K*	201 – 225	£550	£245	£235
L	226 – 255	£750	£425	£415
M	Over 255	£950	£435	£425
* includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £550 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge	Van	Fuel	Total
Tax (20% taxpayer)	£600	£110	£710
Tax (40% taxpayer)	£1,200	£220	£1,420
Tax (50% taxpayer)	£1,500	£275	£1,775
Employer’s Class 1A NICs	£384	£70.40	£454.40

The flat rate of £3,000 is reduced to nil for vans emitting zero CO₂. There will be no fuel benefit for such vans.

National Insurance

2010/11 National Insurance Contributions (NICs)
		Employer	Employee
Payable on weekly earnings of
£97 (lower earnings limit) to £110		0%	0%
£110.01 - £770 (upper accrual point)		12.8%	11%
£770.01 - £844 (upper earnings limit)		12.8%	11%
Over £844		12.8%	1%
Over state retirement age, the employee contribution is generally Nil
Class 1A	On relevant benefits	12.8%	Nil
Class 2	Self employed	£2.40 per week
Class 2	Limit of net earnings for exception	£5,075 per annum
Class 3	Voluntary	£12.05 per week
Class 4*	Self employed on profits
	£5,715 - £43,875	8%
	Excess over £43,875	1%
*Exemption applies if state retirement age was reached by 6 April 2010

Tax and NICs – What lies ahead?

In his 2008 Pre-Budget Report the Chancellor announced that the main NIC rates would be increased by 0.5% for 2011/12. In his 2009 Pre-Budget Report he announced a further 0.5% increase effective from 6 April 2011, taking rates to:

Employee Class 1	12%
Employer Class 1 and Class 1 A/B	13.8%
Self-employed Class 4	9%
Class 1/4 additional rate	2%

With effect from 6 April 2011, the primary threshold and lower profit limits were to be broadly aligned with the income tax personal allowance. It has been announced that these thresholds will be increased by a further £570 to compensate the lowest earners (up to £20,000) for the increase in Class 1 and 4 rates.

Other measures announced

Landline duty

As announced in the Digital Britain White Paper published in June 2009, a new duty will be introduced to help fund the roll-out of Next Generation Access (super-fast broadband). The duty is a 50p per line per month charge on landlines and applies to owners, wholesalers, retailers and end users of ‘local loops’ (a local loop is defined as the physical circuit connecting a network termination point to a public electronic communications network). It will apply on and after 1 October 2010.

Financial Services Compensation Scheme (FSCS)

Intervention by the FSCS can include the provision of financial assistance to an insurer, transferring policyholders’ rights to another insurer or paying compensation to the policyholder.

A wide range of rules applies in connection with taxable and tax advantaged insurance and annuity products. However interventions under the FSCS may give rise to unintended tax consequences, such as the loss of tax advantaged status.

Finance Act 2009 introduced a regulation-making power to address tax impacts arising from FSCS interventions affecting pension saving with insurers. Finance Bill 2010 will introduce a regulation-making power to address tax impacts arising from interventions by the FSCS affecting mainly savings, investments and annuities outside pension schemes.

Regulations made using the powers in this measure will ensure that there will be broadly the same tax treatment for the continued cover or resulting payments as if the FSCS had not intervened. The regulations can apply to a period before they are made, provided they do not increase any person’s tax liability.

National Employment Savings Trust (NEST)

Changes will be made to the pensions tax legislation as soon as possible in the next Parliament to enable the NEST to operate as a registered pension scheme. The measures will:

allow NEST to register z with HMRC for tax purposes, and to be subject to the same tax rules as other tax-registered pension schemes
remove the tax liability on any interest charges on late pension contributions made by an employer to qualifying pension schemes
provide a regulation-making power to deal with any unintended tax consequences that may emerge as a result of the implementation of NEST and the employer duties and compliance as set out in the Pensions Act 2008
remove the tax charge on borrowing linked to the cost of establishing and operating a registered pension scheme, subject to conditions.

Trusts for asbestos victims

The Government announced its intention to introduce legislation in the next Parliament to help trusts specifically set up to compensate asbestos victims, but which have been unable to access tax-efficient structures for the benefit of victims. The legislation will apply retrospectively to April 2006.

Anti-avoidance: Transactions in securities

Legislation will be introduced in Finance Bill 2010 to replace the existing transactions in securities legislation with clearer legislation targeted more effectively at arrangements involving income tax avoidance.

Tax incentive for British video games industry

The Government announced in the Budget its intention, subject to State aid approval, to introduce a new tax relief for the UK video games industry, aimed at supporting game development in the UK. It will be introduced once the detailed design has been settled, and the relief is approved by the European Commission. The Government will be consulting later this year on the design of the new relief.

Special guardianship and residence orders

A new measure will mean that certain payments to special guardians, and to certain carers looking after children under a residence order, will be exempt from income tax.

The new exemption will be similar to the current tax exemption for payments to adopters and will have effect for payments received on or after 6 April 2010.

The National Minimum Wage

The Government has announced that the NMW rates will increase with effect from 1 October 2010.

The current NMW is £5.80 per hour for those aged 22 and over.

With effect from 1 October 2010, 21 year olds will be included in the main adult rate, which will rise to £5.93.

HMRC recently created a new enforcement team with the principal aim of cracking down on employers who are failing to pay their employees at the correct NMW rates. The Dynamic Response Team will concentrate on the most complex and high profile cases.

2010/11 Tax Calendar

April 2010
5	Last day of 2009/10 tax year. Deadline for 2009/10 ISAs. Last day to make disposals using the 2009/10 CGT exemption. Last date for contracting back into the State Second Pension for 2009/10.
14	Due date for income tax for the CT61 period to 31 March 2010.
19/22	Quarter 4 2009/10 PAYE remittance due.
20	Interest will begin to accrue on unpaid PAYE/NI for 2009/10.
30	Normal annual adjustment for VAT partial exemption calculations (monthly returns).
May 2010
3	Quarterly submission date of P46 (Car) for quarter to 5 April.
19	Last day for filing forms P14, P35, P38, and P38A - 2009/10 PAYE returns - without incurring penalties.
31	Last day to issue 2009/10 P60s to employees.
June 2010
30	End of CT61 quarterly period. Last day for UK businesses to reclaim EC VAT chargeable in 2009. Annual adjustment for VAT partial exemption calculations (March VAT year end).
July 2010
6	Deadline for submission of Form 42 (transactions in shares and securities). Deadline for submission of EMI40 (EMI Annual Return) File Taxed Award Scheme Returns, file P11Ds, P11D(b)s and P9Ds. Issue copies of P11Ds or P9Ds to employees.
14	Due date for income tax for the CT61 period to 30 June 2010.
19/22	Quarter 1 2010/11 PAYE remittance due. Final date for payment of 2009/10 Class 1A NICs.
31	Second self assessment payment on account for 2009/10. Annual adjustment for VAT partial exemption calculations (April VAT year end). Liability to 2nd £100 penalty arises for 2009 Tax Return still not filed. 5% surcharge on any tax unpaid for 2008/09. Deadline for tax credit Annual Declaration (if estimated, final figures required by 31 January 2011).
August 2010
2	Quarterly submission date of P46 (Car) for quarter to 5 July.
31	Annual adjustment for VAT partial exemption calculations (May VAT year end).
September 2010
30	End of CT61 quarterly period.
October 2010
1	Due date for payment of Corporation Tax for period ended 31 December 2009.
5	Individuals/trustees must notify HMRC of new sources of income/chargeability in 2009/10 if a Tax Return has not been received.
14	Due date for income tax for the CT61 quarter to 30 September 2010.
19/22	Quarter 2 2010/11 PAYE remittance due.
31	Last day to file 2010 paper Tax Return.
November 2010
1	Please ensure you are retaining your documents for the 2011 Tax Return.
2	Quarterly submission date of P46 (Car) for quarter to 5 October.
December 2010
30	Last day to file your 2010 Tax Return electronically if you wish to have a 2009/10 balancing payment of less than £2,000 collected through your 2011/12 PAYE code.
31	Last day for non-EC traders to reclaim recoverable UK VAT suffered in the year to 30 June 2010. End of relevant year for taxable distance supplies to UK for VAT registration purposes. End of relevant year for cross-border acquisitions of taxable goods in the UK for VAT registration purposes. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 December 2009.
January 2011
1	Due date for payment of Corporation Tax for period ended 31 March 2010.
14	Due date for income tax for the CT61 quarter to 31 December 2010.
19/21	Quarter 3 2010/11 PAYE remittance due.
31	First self assessment payment on account for 2010/11. Capital gains tax payment for 2009/10. Balancing payment - 2009/10 income tax/Class 4 NICs. Last day to renew 2010/11 tax credits. Deadline for amending 2008/09 Tax Return. Last day to file the 2010 Tax Return online.
February 2011
1	£100 penalty if 2010 Tax Return not yet filed. Additional penalties may apply for further delay. Interest starts to accrue on 2009/10 tax not yet paid.
2	Quarterly submission date of P46 (Car) for quarter to 5 January.
14	Last date (for practical purposes) to request NIC deferment for 2010/11.
28	Last day to pay any balance of 2009/10 tax and Class 4 NICs to avoid an automatic 5% surcharge.
March 2011
31	End of Corporation Tax financial year. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 March 2010.

Pre-Budget Report 2009

twettone@wmcca.co.uk (Tim Wettone) — Mon, 14 Dec 2009 16:12:00 -0800

Chancellor Alistair Darling has presented the 2009 Pre-Budget Report, to a politically charged House of Commons. In the context of the global recession, and with a General Election looming, this year’s statement has particular significance.

Despite revising down his economic growth forecast from -3.5% to -4.75% for 2009, and increasing his public sector net borrowing forecast from £175 billion to £178 billion for 2009/10, the Chancellor insisted that global confidence is returning, and predicted that the UK economy will return to growth by the turn of the year.

Describing this as a ‘critical time’ for the economy, the Chancellor outlined a number of measures aimed at securing economic recovery and promoting growth.

Key measures for businesses include a deferral of the planned 1% increase in corporation tax for small firms and an indefinite extension of the ‘time to pay’ scheme. Empty property relief will be extended from 2010/11 for business properties with a rateable value below £18,000, and the Enterprise Finance Guarantee Scheme will also be extended for one year.

Citing the need for ‘difficult choices’, the Chancellor confirmed that national insurance contributions will rise by a further 0.5% from April 2011, although the starting point will be raised so that those earning less than £20,000 will not be affected. The negative RPI to September 2009 meant that many allowances and thresholds were unchanged.

The temporary cut in VAT will end on 1 January 2010 as planned, with the standard rate reverting to 17.5%. The so-called stamp duty ‘holiday’ will come to an end at the same time, while the individual inheritance tax allowance will be frozen at £325,000 until 2011.

A much-anticipated announcement regarding bankers’ bonuses sees the introduction of a new one-off 50% ‘super tax’ on bonuses exceeding £25,000, payable by the bank. Plans to reduce pension tax relief for those earning in excess of £150,000 were also confirmed.

Meanwhile, ‘green’ measures include the introduction of a new ‘boiler scrappage scheme’, together with plans to exempt electric cars from company car tax for five years, and a 100% first year capital allowance for electric vans.

The Chancellor also confirmed a new 50p a month tax on telephone landlines, which will be used to fund next generation broadband services.

Do please contact us for specific advice about how these announcements might affect you or your business.

Measures for business
- Business Payment Support Service
- Business rates
- Small Companies’ Rate of corporation tax
- Patent Box
- R&D tax credits
- Company cars and vans
Personal measures
- Income tax
- National Insurance Contributions (NICs)
- Inheritance tax
- Capital gains tax (CGT)
- Child benefit
- State pension
- Pension Credit
- Tax relief on pension contributions
- Furnished holiday lettings
- Carers
- Salary sacrifice — workplace canteens
VAT and duties
- Standard rate of VAT
- Alcohol and tobacco duty rates
- Bingo duty
Green measures
- Climate change levy
- Green Boiler Incentive Scheme
Other measures
- Bank payroll tax
- Landline Duty
- SDLT holiday to end
- Seafarers
- Equitable liability
- Anti-avoidance measures
What they said

This guide is for general information only. No responsibility is taken for any action taken or refrained from in consequence of its contents. Always seek professional advice before acting.

Measures for business

A wide range of tax and other measures affecting businesses were announced by the Chancellor.

Business Payment Support Service

The 2008 Pre-Budget Report introduced HM Revenue and Customs’ (HMRC) Business Payment Support Service, designed to help viable businesses facing temporary financial difficulties to spread tax payments over an agreed timetable. According to the Government, over 160,000 businesses have taken advantage of the service, collectively employing more than 1.2 million people, spreading over £4 billion of tax. Of this, more than £3 billion has already been repaid.

HMRC will continue to offer this service as part of its time to pay arrangements. All requests will continue to be assessed on the same basis as when the service was introduced.

Business rates

In March 2009, the Government announced that businesses could spread payment of the April 2009 inflation up-rating to business rates over three years, helping ratepayers for an estimated 1.8 million properties in Britain. The Government also temporarily increased the threshold at which empty properties are liable for business rates to £15,000, exempting an estimated 70% of empty properties. On 18 September 2009, the Government removed the requirement for businesses receiving small business rate relief to reapply for relief at revaluation.

The Government is maintaining for a further year the temporary increase in the threshold at which an empty property becomes liable for business rates. For the financial year 2010/11, empty properties with a rateable value of less than £18,000 will be exempt from business rates. This higher threshold reflects the effects of business rates revaluation and is still expected to apply to 70% of empty properties.

Small Companies’ Rate of corporation tax

The Government is deferring, for an extra year, the planned increase in the Small Companies’ Rate of corporation tax. The rate will remain at 21% during 2010/11.

Patent Box

The Pre-Budget Report announced the intention to introduce a ‘Patent Box’, a reduced rate of corporation tax applying to income from patents from April 2013, designed to strengthen the incentives to invest in innovative industries.

The Chancellor announced that, following consultation, this will be a 10% corporation tax rate on income which stems from patents in the UK.

Research & Development (R&D) tax credits

Since the introduction of the R&D tax credit schemes, according to the Government, over 36,000 claims have been made for R&D tax credits with over £3 billion of relief claimed, supporting over £32 billion of research and development activity by companies.

The Chancellor has now announced the removal of the condition that any intellectual property (IP) deriving from the research and development must be owned by the company making the claim. This measure is designed to allow companies to benefit from the R&D tax credit for SMEs without distorting their commercial arrangements in relation to IP. It will have effect for any qualifying expenditure incurred in an accounting period ending on or after 9 December 2009.

Company cars and vans

A new 0% band will apply for company cars propelled solely by electricity, from 6 April 2010 and effective for five years. From the same date, and also applying for five years, will be a reduction to nil of the flat rate charge on company vans propelled solely by electricity.

The new bands will apply for both income tax (employees) and national insurance contributions (NICs) (employer contributions).

The fuel benefit multiplier, governing the tax paid by employees and the NICs paid by employers where free private fuel is provided, will be increased from 6 April 2010 to £18,000 (currently £16,900). Where fuel is provided for private travel in company vans the flat rate charge will be increased from the same date to £550.

The Chancellor also announced a 100% first year capital allowance for electric vans. The allowance will be available for business expenditure on new, unused electric vans incurred on or after 1 April 2010 (corporation tax) or 6 April 2010 (income tax).

The graduated table of company car tax bands will be extended down to a new 10% band (for cars with CO2 emissions up to 99g/km) and all thresholds moved down by 5g/km with effect from 6 April 2012.

Personal measures

Income tax

The tax thresholds and personal allowances for 2010/11 are as follows:

Income Tax	2009/10	2010/11
Basic rate band	£37,400*	£37,400*
Tax rate	20%	20%
Basic rate for dividend income	10%	10%
Higher rate — income over	£37,400	£37,400
Higher rate	40%	40%
Dividend upper rate	32.5%	32.5%
Additional rate — income over	n/a	£150,000
Additional rate	n/a	50%
Dividend additional rate	n/a	42.5%
* There is a 10% starting rate for savings income up to the starting rate limit within the basic rate band. Where taxable non-savings income does not fully occupy the starting rate band the remainder of the starting rate band is available for savings income.
Personal allowances (age at the end of the tax year)
Under 65	£6,475	£6,475
65 - 74	£9,490	£9,490
75 and over	£9,640	£9,640
Higher allowances scaled back if income exceeds	£22,900	£22,900
Adjusted net income above which personal allowances are tapered	n/a	£100,000

National insurance contributions (NICs)

The lower earnings limit for 2010/11 will increase by £2 to £97 per week. All other main NIC rates and thresholds are unchanged for 2010/11.

In his 2008 Pre-Budget Report the Chancellor announced that the main NIC rates would be increased by 0.5% for 2011/12. In his 2009 Report he announced a further 0.5% increase effective from 6 April 2011, taking rates to:

Employee Class 1	12%
Employer Class 1 and Class 1 A/B	13.8%
Self-employed Class 4	9%
Class 1/4 additional rate	2%

Inheritance tax

The Chancellor announced that the inheritance tax allowance will be frozen at £325,000 for individuals and therefore a maximum of £650,000 for married couples and civil partners in 2010/11.

Capital gains tax (CGT)

There is no change in the annual exempt amount which remains at £10,100 for individuals and £5,050 for most trustees.

Child benefit

Child benefit will be increased by 30p to £20.30 per week from April 2010.

State Pension

The Pre-Budget Report announced that in April 2010 the level of the basic State Pension will increase by 2.5%, meaning a full basic State Pension will be worth £97.65 a week. The full couples’ rate for those whose entitlement is based on their spouse or civil partner’s pension will increase to £156.15 a week.

These increases are in line with the policy of uprating the basic State Pension by RPI or 2.5%, whichever is higher.

Pension Credit

There will be an above-indexation increase in the Pension Credit’s minimum income guarantee to £132.60 for single pensioners and £202.40 for couples in 2009/10.

Tax relief on pension contributions

Budget 2009 announced that tax relief on pension contributions would be restricted from April 2011 for individuals with incomes of £150,000 and over.

The Chancellor has now announced that the income definition for the £150,000 threshold will include the value of employer pension contributions.

This will be subject to an income floor so that tax relief for those with incomes below £130,000 (before the inclusion of employer pension contributions) will not be restricted. They will still be subject to the existing annual and lifetime allowances.

The anti-forestalling measures introduced at Budget 2009 will be extended from 9 December 2009 so that all those with incomes of £130,000 and over will be subject to the special annual allowance.

Furnished holiday lettings

The current furnished holiday lettings provisions (now applying to UK taxpayers with qualifying lettings elsewhere in the EEA) will be withdrawn with effect from 6 April 2010.

From that date, furnished holiday lettings will be dealt with under the normal rules for the letting of property, and hence the following tax reliefs will no longer be available:

income tax sideways loss relief and capital allowances for new expenditure
capital gains tax entrepreneurs’ relief, business assets roll-over relief, relief for gifts of business assets; and
exemptions for disposals of shares by companies with a substantial shareholding.

From 6 April 2010 income from furnished holiday lettings will cease to be relevant income for pension relief purposes.

Carers

Two new provisions affecting carers were announced.

Income tax:

A new tax-free allowance will apply for Shared Lives carers, from 6 April 2010, replacing the current simplified income tax arrangements.

The tax-free allowance will be available per household and consists of:

£10,000 fixed amount per tax year
£200 per week (or part week) per placement aged under 11; and
£250 per week (or part week) per placement aged 11 or over.

Qualifying Shared Lives carers whose total receipts from providing care do not exceed the tax-free allowance for the year will be exempt from income tax on their income from providing Shared Lives care. Those whose receipts exceed the tax-free allowance for the year can choose to pay tax on either the amount by which their receipts exceed the allowance or on their profits calculated using the normal tax rules for businesses.

Capital gains tax (CGT):

Strictly, the CGT principal private residence (PPR) relief is not available for any part of the home which is used exclusively for the purpose of a trade, business, profession or vocation. Where a person cares for an adult under a local authority placement scheme, their contract may require them to set aside one or more rooms for the exclusive use of the adult in their care.

Legislation to be introduced in the 2010 Finance Bill will remove the potential restriction on the PPR relief, for disposals on or after 9 December 2009.

Salary sacrifice — workplace canteens

Measures will be introduced from 6 April 2011 to remove the income tax exemption for meals provided in a canteen or on the employer’s premises, in cases where the provision is linked to a salary sacrifice arrangement or a flexible benefits remuneration arrangement, where the food and drink provided (or the means of obtaining it) is commensurate with the amount of income given up.

VAT and duties

Standard rate of VAT

It has been confirmed that the temporary cut in VAT will end on 1 January 2010 as planned, with the standard rate reverting from 15% to 17.5%.

The VAT flat rate scheme percentages have been recalculated accordingly, to ensure they are based on the 17.5% rate effective from 1 January 2010.

Alcohol and tobacco duty rates

As announced in the 2008 Pre-Budget Report, alcohol and tobacco duty rates will remain at current levels when the standard rate of VAT returns to 17.5% in January 2010.

Bingo duty

Bingo duty is to be reduced from 22% to 20% from Budget 2010.

Green measures

Climate change levy

The reduced rate of climate change levy for facilities in energy intensive sectors, currently 20%, will be increased to 35% from 1 April 2011.

Claimants will be required to give their energy suppliers fresh certificates confirming their new relief entitlement — for existing claimants, this will be by the completion of their first annual review after 1 April 2011.

Green Boiler Incentive Scheme

The Pre-Budget Report announces a £400 incentive to help up to 125,000 households upgrade old inefficient boilers to the latest energy efficient models (available to those who buy a new efficient boiler or renewable heat unit to replace a working G rated boiler).

Other measures

Bank payroll tax

The Chancellor announced a new tax to be levied on banks (and certain other companies) providing a bonus exceeding £25,000 to a banking employee directly or through an intermediary.

The tax will be charged at 50% of the amount by which the bonus exceeds £25,000 and will have effect from 9 December 2009 to 5 April 2010, and is payable on 31 August 2010. It is in addition to the income tax and NICs the employee will pay, at a combined rate of up to 41%.

Bank payroll tax is not taken into consideration when calculating the bank’s profits or loss for corporation tax or income tax purposes.

Detailed provisions, including anti-avoidance provisions, are available on the HMRC website.

Landline Duty

HM Treasury, HMRC, and the Department for Business, Innovation and Skills will shortly consult on the implementation of the Landline Duty.

The Landline Duty of 50p per month for each line is being introduced to help fund the roll-out of superfast broadband (Next Generation Access) to 90% of the country by 2017. The Digital Britain White Paper committed to introduce the new duty in the financial year 2010/11.

SDLT holiday to end

A stamp duty land tax (SDLT) holiday was announced on 2 September 2008 for all houses costing up to £175,000.

The holiday will end as planned on 31 December 2009 and the threshold for houses will revert to £125,000 (or £150,000 in disadvantaged areas) from 1 January 2010.

Seafarers

Legislation will be introduced in the 2010 Finance Bill to extend, from 6 April 2011, the Seafarers’ Earnings Deduction to EU and EEA resident seafarers.

Equitable liability

The current law does not allow HMRC to forgo tax that is legally due. By a concession published in Tax Bulletin 18 in August 1995, HMRC has not pursued amounts when a taxpayer can prove they would not have been due if he or she had filed a return on time. The concessionary treatment applies only where a taxpayer:

shows that the figure of tax due is excessive
shows what the correct amount should have been; and
brings his or her tax affairs up to date, including payment of tax, interest and penalties.

The concessionary treatment can usually only apply to any taxpayer on one occasion although it may cover a number of years. The current concession will continue to apply until legislation is introduced to formalise it.

Anti-avoidance measures

Offshore bank accounts — New Disclosure Opportunity

Following a recent tribunal decision, HMRC is receiving details from over 300 financial institutions in the UK regarding offshore bank accounts. Alongside this, the Government is offering the New Disclosure Opportunity (NDO), giving those with undeclared assets a final chance to come forward to pay tax, interest and a reduced penalty. The notification window for the NDO runs until 4 January 2010, with a final disclosure and full payment required by 12 March 2010.

The Chancellor has also proposed that there will be a requirement to notify HMRC when opening offshore bank accounts in certain jurisdictions, supported by a separate penalty regime.

Inheritance tax avoidance schemes

Draft legislation has been published to close two schemes designed to avoid inheritance tax charges on relevant property trusts. First, where a person transfers property into a trust in which they retain a future interest they will be charged inheritance tax if they become entitled to an actual interest under the trust. Second, where a person purchases an interest in a trust that interest will be treated as part of their estate for inheritance tax purposes.

The Government has announced it is also examining ‘wider solutions’ regarding the use of trusts to avoid inheritance tax charges.

Disclosure of Tax Avoidance Schemes

Regulations will be introduced to extend the Disclosure of Tax Avoidance Schemes (DOTAS) to require the disclosure of certain stamp duty land tax (SDLT) avoidance schemes that concern residential property with a value of at least £1 million. Users of all SDLT avoidance schemes, for both commercial and residential property, will be required to report the use of the scheme back to HMRC.

Other anti-avoidance measures

Other announcements include measures to:

counter avoidance through the artificial creation of excess capital allowances
close a loophole through which fees are ‘artificially carved out’ of a taxable insurance contract to avoid insurance premium tax
ensure that the tax exemption for the inflationary return of an index-linked gilt cannot be exploited for avoidance purposes
prevent leasing schemes that generate artificial tax losses in excess of the value of taxable income taking income out of the charge to tax
prevent companies using consortium arrangements that attempt to deliberately circumvent the sale of lessors anti-avoidance legislation
remove the exemption from stamp duty or stamp duty reserve tax where new shares are issued within the EU and subsequently transferred to a depositary receipt system or clearance service outside the EU.

What they said

“The choice facing the country is between securing recovery or wrecking it.”
Chancellor of the Exchequer, Alistair Darling

“We were promised a Pre-Budget Report and what we got was a pre-election report.”
Shadow Chancellor, George Osborne

“This is a good Budget for bingo and boilers.”
Vince Cable, Liberal Democrat treasury spokesman

“It’s clear that the NIC rises mean a brake on employment growth. While everyone understands the importance of restoring the public finances to a sustainable path, a tax on jobs is not the way to do it.”
David Frost, Director General of the British Chambers of Commerce

“The key theme of this year’s PBR is prudence postponed.”
Miles Templeman, Director General of the Institute of Directors

Two new directors!

twettone@wmcca.co.uk (Tim Wettone) — Thu, 19 Nov 2009 10:01:00 -0800

We are delighted to announce that Paul Susans and Wendy Croucher have today been appointed as additional directors of Wettone Matthews Ltd.

Paul joined the firm in 1985, bringing with him a portfolio of clients for whom he provided a range of services. Over the years, Paul's increasing influence within the firm, coupled with a steady growth of new and loyal clients, have made this a long overdue appointment as a director and now gives proper recognition of his significant contribution to the firm.

Wendy joined the firm in 2000, was admitted as a qualified member of ACCA a year later and, like Paul, has grown in her influence within the practice. Her calm and reassuring manner has gained much admiration among clients and our staff.

We look forward to their added contribution now that they have both taken on this additional responsibility.

VAT changes for 2010

twettone@wmcca.co.uk (Tim Wettone) — Thu, 12 Nov 2009 08:11:00 -0800

There are some important changes that come into effect in 2010. The changes most likely to affect you are:

The standard rate of VAT increases to 17.5% on 1 January 2010.
HMRC has announced that they are to phase out paper VAT returns. From 1 April 2010, the only businesses permitted to continue using paper returns will be those with a turnover of no more than £100,000 net of VAT. All larger or newly registered businesses will, from that date, be forced to submit electronically.
If you or your company sells goods or services to other EU member states there will be changes to how you account for VAT.

a) Currently the basic rule (now to be called the general rule) is that VAT is due where the supplier belongs. From 1 January 2010 the general rule will be that VAT is due where the customer belongs for business to business supplies. For business to consumer supplies, VAT will continue to be due where the supplier belongs.

b) EC Sales Lists for Services

If you supply services to businesses in other EU countries and the place of supply of those services is the customer?s country (with the consequence that the customer must account for a reverse charge) then with effect from 1 January 2010 you must now complete an EC Sales list for those services.

The form that is currently used for the supply of goods to other EU Member States will still be used but marking the indicator box with code 3 for services.

c) Monthly EC Sales lists for Goods

Additionally, there will be new requirements for the submission of monthly EC Sales Lists for goods by businesses where EC sales in a calendar quarter exceed £70,000 (£35,000 from 2012).

d) New deadlines for submission of EC Sales Lists

The timescale for the submission of EC Sales Lists for goods (and now services) will be reduced from 42 days to 14 days for paper forms and 21 for electronic submission. Penalties for late submission, calculated at £5, £10 or £15 per day, depending how many times you have been late, will be imposed.

Selby Gray clocks up 25 years!

twettone@wmcca.co.uk (Tim Wettone) — Thu, 01 Oct 2009 07:10:00 -0700

We are proud to record the fact that, on 1 October 2009, Selby Gray completed 25 years service for this company and its predecessors.

Selby has been a totally dedicated and loyal staff member, whose taxation knowledge and experience has made a positive effect on clients over all these years and has been of huge assistance to us all internally. We don't know what we would have done without her.

Surrounded by all her colleagues, she was presented with a crystal decanter by the company's directors, Tim Wettone and Phil Du Gay, to mark the occasion, and was also given a brand new calculator, as her old one was looking totally worn out!

Here's to the next 25 years!!

Budget 2009 report

twettone@wmcca.co.uk (Tim Wettone) — Thu, 23 Apr 2009 03:04:00 -0700

We can help you to reassess your plans regularly, and adapt them as your personal and business circumstances change. With our help, you can plan for a rewarding and financially secure future.

Please note: while most taxation changes take effect from the start of the financial year, or tax year, some may not take effect until 2010, or later. Where relevant, details of these changes have been included in this Report. Throughout the Report, 'HMRC' refers to HM Revenue & Customs.

Budget Highlights
Business Tax & Investment Incentives
Capital Taxes
Duties
Income Tax & Personal Savings
Value Added Tax
Tax and Travel
National Insurance
Other Measures Announced
2009/10 Tax Calendar

Darling defiant in face of recession

Chancellor Alistair Darling has unveiled a series of measures aimed at tackling the 'unprecedented economic crisis'. As widely anticipated, growth forecasts for 2009 have been revised down, with the economy expected to shrink by 3.5%; while borrowing forecasts have risen sharply to £175 billion. However, despite the economic gloom, the Chancellor asserted that the economy will recover, forecasting growth of 1.25% next year.

Key announcements include the introduction, from April 2010, of a 50% income tax rate for those earning more than £150,000 a year.

The stamp duty land tax 'holiday' for residential properties valued at £175,000 or less will be extended to the end of 2009.

Measures for businesses include the introduction of a temporary 40% first year allowance and an extension of help for loss-making companies.

The Chancellor allocated £1 billion to tackle climate change, and announced a commitment to cut UK carbon emissions by 34% by 2020.

The introduction of a 'car scrappage' scheme was also confirmed, offering £2,000 to people who trade in cars that are over 10 years old. Meanwhile, fuel duty will rise by 2p a litre from September 2009.

Other measures include an increase in the child element of Child Tax Credit from April 2010; credits towards the basic state pension for grandparents of working age who care for their grandchildren; and a rise in the annual limit for ISAs to £10,200.

Budget Highlights

50% income tax for high earners
40% first year capital allowance
Extension of trade loss carry back rules
Extension of SDLT 'holiday'
Removal of higher rate tax relief on pension contributions

Business Tax and Investment Incentives

Corporation Tax

Corporation tax rates and bands are as follows:

Financial Year to	31 March 2010	31 March 2009
Taxable profits
First £300,000	21%	21%
Next £1,200,000	29.75%	29.75%
Over £1,500,000	28%	28%

Trading losses

Trade loss carry back will be extended to a period of three years, with losses being carried back against later years first. After carry back to the preceding year, a maximum of £50,000 of unused losses will be available for carry back to the earlier two years. This will apply to trading losses made by companies in accounting periods ending between 24 November 2008 and 23 November 2010 and to trading losses made by unincorporated businesses in tax years 2008/09 and 2009/10. The £50,000 limit applies separately to the unused losses of each 12 month period or tax year.

Capital allowances

A 40% first year allowance will be introduced for expenditure on qualifying plant and machinery that would normally be allocated to the main capital allowance pool. This will be available to businesses incurring such expenditure in the 12 month period beginning on 1 April 2009 for corporation tax and on 6 April 2009 for income tax.

Qualifying expenditure incurred on cars on or after 1 or 6 April 2009 will now be allocated to one of the two general plant and machinery pools. Cars with CO2 emissions exceeding 160 g/km will be dealt with in the special rate pool and attract writing down allowances (WDA) at 10%. Cars with CO2 emissions of 160 g/km or less will be added to the main rate pool and attract WDA at 20%. Expenditure incurred before April 2009 will continue to be subject to the old 'expensive' car rules for a transitional period of around five years. Cars that have an element of non-business use will continue to be dealt with in single asset pools to enable the private use adjustment to be made, but the rate of WDA will be determined by the car?s CO2 emissions.

Car leases

From April 2009, the rules restricting the amount of car lease rental payments that can be deducted for tax purposes will be changed to a flat rate disallowance of 15% of relevant payments. This will apply only in respect of cars with CO2 emissions exceeding 160 g/km. For leases that commenced prior to April 2009, the previous rules will continue to apply until the end of the lease.

Enterprise Investment Scheme (EIS)

The restrictions on the carry back of income tax relief to the previous tax year will be removed. This will apply to 2009/10 and subsequent years. With effect from 22 April 2009, further changes will be introduced to simplify and improve the EIS rules.

Loan relationships

Where trade debts between connected companies are released after 22 April 2009, the debtor companies will no longer be taxed on the debts released.

For accounting periods beginning on or after 1 April 2009, deductions for interest payable to certain connected foreign companies will now be available on a paid basis rather than on the accruals basis.

Foreign profits

Legislation is to be introduced to ensure that dividends and other distributions received from foreign companies on or after 1 July 2009 will largely be exempt from corporation tax. UK distributions will be exempt to the same extent. Finance expense payable by UK members of a group of companies will be subject to a cap equal to the consolidated gross finance expense of the group. This will apply to amounts payable in accounting periods beginning on or after 1 January 2010. With effect from 1 July 2009 there will be changes to the controlled foreign companies rules and the Treasury Consent rules will be replaced.

Corporate transparency

For accounting periods beginning on or after Royal Assent the senior accounting officers of large companies and large groups of companies will have reporting obligations aimed at ensuring that the accounting systems are adequate for the purposes of accurate tax reporting.

These obligations will be supported by penalties chargeable on the senior accounting officer personally and on the company.

Anti-avoidance

A number of measures will be introduced to tackle anti-avoidance. These will affect:

Intra-group convertible finance
Derecognition of income from derivative contracts
Plant and machinery leasing
Foreign exchange matching
?Disguised interest?
Exploitation of qualifying loan interest relief
Real Estate Investment Trust (REIT) regime
Double tax relief where foreign tax is repaid
Receipts derived from a right to receive income.

Capital taxes

Capital Gains Tax (CGT)

The annual exempt amount is increased to £10,100 for individuals (£5,050 for most trustees) for 2009/10.

The rate of CGT remains 18% with entrepreneurs? relief potentially reducing the effective rate of tax on qualifying gains to 10%.

Offshore funds

The Chancellor announced that an interest in a transparent offshore fund will be an asset for the purpose of calculating CGT on chargeable gains (as is already the case for shares in a company or units in a unit trust). Investors will no longer be required to consider disposals of the underlying assets for calculating CGT on chargeable gains.

The Government will discuss with industry how to make similar changes to the tax treatment of chargeable gains for investors subject to corporation tax.

There will be no effect on interests in tax transparent foreign partnerships which will continue to be treated as transparent for both income and gains in the same way as UK partnerships.

Inheritance tax (IHT)

The IHT allowance (nil-rate band) is increased to £325,000 for 2009/10. The transferability of the allowance gives an effective joint tax-free maximum of £650,000 for married couples and civil partnerships.

Agricultural property relief (APR) and woodlands relief (WR)

Legislation will be introduced in Finance Bill 2009 to extend IHT APR and WR to property in the European Economic Area. Property qualifying for this extended IHT relief will also qualify for CGT hold over relief.

The extension of APR and WR against IHT and CGT hold over relief will have effect on and after 22 April 2009 as well as for certain earlier events.

Duties

Stamp duty land tax (SDLT): temporary increase in thresholds

Last year the Government raised the threshold at which SDLT becomes payable from transactions in excess of £125,000 to those in excess of £175,000 in a bid to revive the UK?s ailing housing market.

This provides an exemption from SDLT for land transactions consisting entirely of residential property where the chargeable consideration is not more than £175,000.

The so-called SDLT 'holiday' applies to transactions with an effective date on or after 3 September 2008 and before 3 September 2009.

This latest measure means that the increased threshold of £175,000 for residential property will continue to apply beyond 3 September 2009 and will now end on 31 December 2009.

Following the reforms, SDLT is currently charged at 1% on properties sold for between £175,001 and £250,000, with the tax rising to 3% above this level. Homes worth more than £500,000 attract tax at a rate of 4%.

Alcohol and tobacco products duty

All duty rates for alcohol will rise by 2% from their current levels. The impact of the changes on retail prices from 23 April 2009 for typical alcoholic drinks is equivalent to:

13p on a 70cl bottle of spirits
1p on a pint of beer
1p on a litre of still cider
4p on a 75cl bottle of sparkling cider
4p on a 75cl bottle of wine/made wine
5p on a 75cl bottle of sparkling wine.

The duty rates for tobacco products are increased by 2%.

Income Tax and Personal Savings

Income Tax rates		2009/10	2008/09
Starting rate band limit*		£2,440	£2,320
Tax Rate*		10%	10%
Basic rate band		£37,400	£34,800
Basic rate		20%	20%
Savings rate		20%	20%
Dividend ordinary rate		10%	10%
Higher rate - income over		£37,400	£34,800
Tax rate excluding dividends		40%	40%
Dividend upper rate		32.5%	32.5%
* Where taxable non-savings income does not fully occupy the starting rate limit, the remainder of the limit is available for savings income at the 10% starting rate.
Personal allowances (ages are as at the end of the tax year)
Allowances that reduce taxable income		2009/10	2008/09
Personal allowance (PA)	under 65	£6,475	£6,035
	65 to 74*	£9,490	£9,030
	75 and over*	£9,640	£9,180
	minimum	£6,475	£6,035
Allowances that reduce tax
Married couple's allowance (MCA)
Age of elder partner	74*	n/a	£653.50
	75 and over*	£696.50	£662.50
	minimum	£267	£254.00
*Higher allowances for those aged 65 or more are scaled back when income exceeds £22,900 (2008/09 £21,800). MCA is only available where at least one partner was born before 6 April 1935.

Starting rate example

In 2009/10, Mr Morris has earnings from employment of £7,000 and savings income of £4,000. His personal allowance is £6,475 which is completely used against his earnings, leaving £525 taxable at 20%. The rest of the starting rate limit for savings (£2,440 - £525) can be used to tax £1,915 of his savings income at 10%. The balance of his savings income of £2,085 (£4,000 - £1,915) remains taxable at 20%.

Mr Morris? employer has deducted £105 through PAYE and his bank will have taken tax off all of his interest at 20%, so he can claim a repayment of tax of £191.50 (£1,915 at 10%) from HMRC.

Individual Savings Accounts (ISAs)

The ISA limit will be raised to £10,200, up to £5,100 of which can be saved in cash. The new limits will apply from 6 October 2009 for people aged 50 and over in 2009/10 and for all ISA investors from 2010/11 onwards.

Child Trust Fund

Starting in April 2010, for children in receipt of Disability Living Allowance at any point in 2009/10, the Government will contribute £100 every year to the Child Trust Fund accounts of all disabled children born on or after 1 September 2002, with severely disabled children receiving £200 per year.

Income shifting

The introduction of controversial legislation designed to prevent 'income shifting' will not take place in April 2009 as previously announced. The Government maintains its stance that it 'firmly believes it is unfair' to allow a minority of individuals to benefit financially from shifting part of their income to someone else who is subject to a lower rate of tax. However, in the light of the current economic climate the Government has deferred action and is instead keeping the issue under review.

Taxation of overseas dividends

Since 6 April 2008, individuals with shareholdings of less than 10% in non-UK resident companies have been entitled to a non-payable tax credit. From 22 April 2009, individuals with shareholdings of 10% or more in receipt of dividends from non-UK resident companies will become entitled to a non-payable tax credit, subject to certain conditions.

The non-payable dividend tax credit for offshore funds which are largely invested in equities will be restored from 22 April 2009. The new rules will also provide that where the offshore fund is substantially invested in interest bearing assets, individuals receiving distributions will be treated for tax purposes as having received interest and not a dividend or other type of distribution.

Pension savings

The Chancellor announced that tax relief on pension savings will be restricted to the basic rate from 6 April 2011 for those with taxable income of £150,000 or more.

Anti-forestalling measures have been announced. They will prevent those potentially affected from seeking to forestall this change by increasing their pension savings in excess of their normal regular pattern prior to the restriction taking effect. Those measures will not affect:

those with income of less than £150,000 for the 2011/12 tax year and for both of the preceding two tax years, and
those with income in any of the relevant tax years of £150,000 or more who continue with their existing pattern of regular savings and who do not make any additional pension savings.

Those who do increase their pension savings will be affected only if their total pension savings in the year exceed £20,000. The change will not affect any normal, regular ongoing pension savings that were in place before 22 April 2009, whatever their value.

Personal allowances for non-resident individuals

Certain non-residents are entitled to claim UK personal allowances by virtue of being Commonwealth citizens. Following advice that this particular condition is not compliant with the Human Rights Act, the entitlement of such non-residents will be withdrawn with effect from 6 April 2010.

Entitlement will continue for those qualifying as, for example, EEA nationals, Crown servants and residents of the Channel Islands and Isle of Man.

Employer-provided (rented) living accommodation

An employee has typically been charged to tax on the amount of rent the employer pays for the accommodation. Avoidance through payment of substantial premiums and small rents will be stopped for leases entered into or extended from 22 April 2009 by treating a premium paid for a lease of 10 years or less as rent paid.

2010/11 onwards

The Chancellor announced a new higher income tax rate of 50% to apply from 6 April 2010 for taxable income over £150,000. Also announced were consequent changes to the rate of income tax on dividends, with a top rate of 42.5% and the rates of tax on trusts with a 42.5% rate on dividends and a 50% rate for other trust income.

From 2010/11 the basic personal allowance for income tax will be gradually reduced to nil for individuals with 'adjusted net incomes' above £100,000.

Value Added Tax

From	1 Dec 2008	1 Jan 2010
Standard rate	15%	17.5%
VAT fraction	3/23	7/47
Reduced Rate	5%	5%
Taxable Turnover Limits from 1 May 2009
Registration - last 12 months or next 30 days over	£68,000
Deregistration - next 12 months under	£66,000
Annual accounting scheme	£1,350,000
Cash accounting scheme	£1,350,000
Optional flat-rate scheme	£150,000

VAT: Change of standard rate

The standard rate of VAT will return to 17.5% from 1 January 2010. Targeted legislation will counter schemes that purport to apply the 15% VAT rate to goods or services to be supplied on or after the date that the rate returns to 17.5%.

Cross-border VAT: Changes to EC sales lists

This measure introduces a requirement for UK businesses that supply services where the place of supply is the customer?s country to complete EC Sales Lists (ESLs) for each calendar quarter. The changes will have effect on and after 1 January 2010.

Cross-border VAT: Changes to place of supply of services rules

Changes were announced to the place of supply of services rules. The place of supply rules determine the country where a supply of services is made and where any VAT is payable. They also determine whether, if VAT is due on a supply, it should be accounted for by the supplier of a service or their business customer.

The new rules aim to ensure that, as far as possible, VAT is due in the country in which the service is consumed (e.g. where the customer is established) rather than where the supplier is established. The result for UK business customers is that they will be liable to account for UK VAT on most services provided by their overseas supplier under the reverse charge provisions, rather than the supplier charging VAT. This forms part of a package of changes designed to modernise the VAT system for cross-border trading, and to counter fraud. The changes will come into effect from 1 January 2010 across the EU.

Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO2 emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage' as shown in the table below. The first line of figures in the table relates to qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2009/10 remains at £16,900.

The percentages are reduced for cars (except QUALECs) that can be driven on alternative fuels by:

2% for cars manufactured to be capable of being run on E85 fuel
2% for bi-fuel cars or those which run on LPG only
3% for hybrid electric and petrol cars
6% for electric only cars (in practice the taxable benefit will be 9% of the price).

CO₂ emissions (g/km)	Appropriate percentage		Quarterly VAT
	Petrol %	Diesel %	Fuel scale charge £	VAT on charge
			Fuel scale charge £	£ (15%)	£ (17.5%)
120 and below	10	13	126	16.43	18.76
121 - 139	15	18	189	24.65	28.14
140 - 144	16	19	201	26.21	29.93
145 - 149	17	20	214	27.91	31.87
150 - 154	18	21	226	29.47	33.65
155 - 159	19	22	239	31.17	35.59
160 - 164	20	23	251	32.73	37.38
165 - 169	21	24	264	34.43	39.31
170 - 174	22	25	276	36.00	41.10
175 - 179	23	26	289	37.69	43.04
180 - 184	24	27	302	39.39	44.97
185 - 189	25	28	314	40.95	46.76
190 - 194	26	29	327	42.65	48.70
195 - 199	27	30	339	44.21	50.48
200 - 204	28	31	352	45.91	52.42
205 - 209	29	32	365	47.60	54.36
210 - 214	30	33	378	49.30	56.29
215 - 219	31	34	390	50.86	58.08
220 - 224	32	35	403	52.56	60.02
225 - 229	33	35	416	54.26	61.95
230 - 234	34	35	428	55.82	63.74
235 and above	35	35	441	57.52	65.68

Changes from April 2011

The Chancellor announced changes which will take effect from 6 April 2011:

the lower emissions figure will be reduced
the £80,000 price cap will be abolished
the reductions for cars using various alternative fuels will be abolished.

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge.

The table above shows the VAT chargeable for quarters commencing on or after 1 May 2009. The last two columns take account of the change of the standard rate of VAT from 15% to 17.5% with effect from 1 January 2010.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates at the time of the Budget are as follows:

Vehicle	First 10,000 miles	Thereafter
Car / Van	40p	25p
Motorcycle	24p	24p
Bicycle	20p	20p

Car - fuel only advisory rates
Engine Capacity	Petrol	Diesel	LPG
Up to 1400cc	10p	11p	7p
1401 - 2000cc	12p	11p	9p
Over 2000cc	17p	14p	12p

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

Car costs ? Vehicle Excise Duty (VED) rates

Vehicle Excise Duty ('Car Tax') rates also reflect emissions, with lower scale rates for cars using alternative fuels. The number of VED bands has been increased from seven to 13. The following table shows the rates which will apply for cars registered on or after 1 March 2001:

VED Band	CO₂ emissions (g/km)	From 1 May 2009		From 1 April 2010
VED Band	CO₂ emissions (g/km)	Petrol & Diesel	Alternative fuel cars	Petrol & Diesel	Alternative fuel cars
A	Up to 100	£0	£0	£0	£0
B	101 ? 110	£35	£15	£20	£10
C	111 ? 120	£35	£15	£30	£20
D	121 ? 130	£120	£100	£90	£80
E	131 ? 140	£120	£100	£110	£100
F	141 ? 150	£125	£105	£125	£115
G	151 ? 165	£150	£130	£155	£145
H	166 ? 175	£175	£155	£180	£170
I	176 ? 185	£175	£155	£200	£190
J	186 ? 200	£215	£200	£235	£225
K*	201 ? 225	£215	£200	£245	£235
L	226 ? 255	£405	£390	£425	£415
M	Over 255	£405	£390	£435	£425
* includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £500 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge	Van	Fuel	Total
Tax (20% taxpayer)	£600	£100	£700
Tax (40% taxpayer)	£1,200	£200	£1,400
Employer?s Class 1A NICs	£384	£64	£448

National Insurance

2009/10 National Insurance Contributions (NICs)
		Employer	Employee
Payable on weekly earnings of
£95 (lower earnings limit) to £110		0%	0%
£110.01 - £770 (upper accruals point)		12.8%	11%
£770.01 - £844 (upper earnings limit)		12.8%	11%
Over £844		12.8%	1%
Over state retirement age, the employee contribution is Nil
Class 1A	On relevant benefits	12.8%	Nil
Class 2	Self employed	£2.40 per week
Class 2	Limit of net earnings for exception	£5,075 per annum
Class 3	Voluntary	£12.05 per week
Class 4*	Self employed on profits
	£5,715 - £43,875	8%
	Excess over £43,875	1%
*Exemption applies if state retirement age was reached by 6 April 2009

Tax and NICs ? What lies ahead?

The Government has already made announcements about increases in tax and NICs over the next few years. However, the personal tax changes have now been replaced and the updated summary is as follows:

From April 2009, the upper earnings limit for Class 1 and Class 4 NIC has been increased substantially in order to align it with the level at which people generally start to pay higher rate income tax (£844 per week). The new upper accrual point (£770 per week) for Class 1 NICs sets a cap on the level above which there will be no additional pension benefits (there are none for Class 4 NICs in any case).
From April 2010, those with adjusted net incomes above £100,000 will have their basic personal allowances scaled back to a minimum of Nil. New tax rates will apply to incomes over £150,000 ? 50% for savings and non-savings income; 42.5% for dividend income. The small companies? rate of corporation tax will increase to 22%.
From April 2011, there will be a general increase of 0.5% to the main NIC rates. At the same time, the NIC threshold will be brought back into line with the basic personal allowance.

Other measures announced

Penalties for incorrect returns and failure to notify a taxable activity

For return periods ending on or after 1 April 2009, where the filing date is after 1 April 2010, the new penalty regime for incorrect returns introduced in 2007 for income tax, CGT, VAT, PAYE and NICs has been extended across all other taxes and duties. From 1 April 2009, the penalty regime for failure to notify HMRC of a new charge is aligned across all taxes and duties.

The new provisions for incorrect returns provide for penalties in line with Schedule 24 to FA 2007, which are based on the amount of tax understated, the nature of the behaviour and the extent of disclosure by the taxpayer. There is no penalty where a taxpayer makes a mistake, having taken reasonable care, but there is a penalty of up to:

30% for failure to take reasonable care
70% for a deliberate understatement
100% for a deliberate understatement with concealment.

Each penalty is substantially reduced where the taxpayer makes a disclosure (takes active steps to put right the problem), more so if this is unprompted.

Vehicle scrappage scheme

A vehicle scrappage scheme designed to boost the car industry will be introduced from May 2009. A discount of £2,000 will be offered to consumers buying a new vehicle to replace a vehicle more than ten years old, which they have owned for more than 12 months. The Government will set aside £300 million, with funding matched by participating manufacturers. The scheme will end by the start of March 2010, or when funding for the scheme has been used if earlier.

?Name and shame? legislation for tax defaulters

Legislation will be introduced in Finance Bill 2009 enabling HMRC to publish the names and details of individuals and companies who are penalised for deliberate defaults leading to a loss of tax of more than £25,000. Details will be published quarterly within one year of the penalty becoming final and then removed from publication one year later.

Names will not be published of those who make a full unprompted disclosure or a full prompted disclosure within a time limit (currently unspecified).

There is an appeal right to an independent tribunal against all elements of the penalty which would determine whether names would be published and taxpayers will be informed prior to publication and be able to make representations to HMRC. Details will not be published until all appeal avenues against the additional tax and penalties are exhausted or expired.

Reclaiming tax overpayments

Finance Bill 2009 will introduce a means of reclaiming overpayments of income tax, CGT and corporation tax where there is no other statutory route. It will replace any non-statutory claims. The legislation also amends the error or mistake relief rules to provide additional taxpayer safeguards.

The measure will have effect for claims made on or after 1 April 2010. The time limits for claiming repayments are currently from five years and ten months to six years from the end of the period for which the return was made. From 1 April 2010 they must be claimed within four years.

Penalties and interest regime harmonisation

Legislation will be introduced to create a harmonised interest regime and aligned penalties regimes for late filing, across the taxes and duties administered by HMRC, starting with interest and penalties on late paid PAYE from April 2010.

NIC credits for families

From April 2011, grandparents and other family members will be able to gain NIC credits toward their basic state pension for caring for their grandchildren or members of their family aged 12 or younger, for 20 hours a week or more.

Remittance basis

A number of changes were announced to the rules applying to the remittance basis. In some cases they will be backdated to 6 April 2008 (the date from which the new regime applies), others will have effect from 22 April 2009. The changes include:

removal of the obligation for individuals employed in the UK, who in the same year receive income from an overseas employment, to file a return so long as their overseas employment income is less than £10,000 and their overseas bank interest is less than £100 in any tax year, and it is all subject to a foreign tax
an extension of the exemption allowing an individual using the remittance basis to bring into the UK property which was purchased from relevant foreign income, to property purchased out of foreign employment income and foreign chargeable gains
confirmation that the £30,000 remittance basis charge will count as UK tax for the purposes of Gift Aid.

National Minimum Wage decision delayed

New National Minimum Wage (NMW) rates are traditionally implemented on 1 October, following the recommendations of the Low Pay Commission (LPC).

Since its establishment in 1998, the LPC has been charged with independently advising the Government on the NMW. However, as the UK grapples with the effects of the recession, the LPC has requested more time to compile its suggestions for 2009/10.

The Commission will now report to the Prime Minister and Secretary of State for Business by 1 May 2009, although the delay is not expected to affect the enforcement date of 1 October for any new rates.

The decision has been postponed from February to May 2009 to allow the LPC to amass an additional two months' worth of economic data, including the Bank of England's inflation report, employee job figures for December, GDP figures for the fourth quarter of 2008, and updates on average earnings.

The current NMW for those over 21 is £5.73 per hour. For those aged 18 to 21 the rate is £4.77 per hour, while 16 and 17 year olds must be paid a minimum of £3.53 an hour.

2009/10 Tax Calendar

April 2009
5	Last day of 2008/09 tax year. Deadline for 2008/09 ISAs. Last day to make disposals using the 2008/09 CGT exemption. Last date for contracting back into the State Second Pension for 2008/09.
14	Due date for income tax for the CT61 period to 31 March 2009.
19/22	Quarter 4 2008/09 PAYE remittance due.
20	Interest will begin to accrue on unpaid PAYE/NI for 2008/09.
30	Normal annual adjustment for VAT partial exemption calculations (monthly returns).
May 2009
3	Quarterly submission date of P46 (Car) (for employees whose car and/or fuel benefit has changed in quarter to 5 April).
19	Last day for filing forms P14, P35, P38, and P38A - 2008/09 PAYE returns - without incurring penalties.
31	Last day to issue 2008/09 P60s to employees
June 2009
30	End of CT61 quarterly period. Last day for UK businesses to reclaim EC VAT chargeable in 2008. Annual adjustment for VAT partial exemption calculations (March VAT year end).
July 2009
6	Deadline for submission of Form 42 (transactions in shares and securities). Deadline for submission of EMI40 (EMI Annual Return). File Taxed Award Scheme Returns, file P11Ds, P11D(b)s and P9Ds. Issue copies of P11Ds or P9Ds to employees.
14	Due date for income tax for the CT61 period to 30 June 2009.
19/22	Quarter 1 2009/10 PAYE remittance due. Final date for payment of 2008/09 Class 1A NICs.
31	Second self assessment payment on account for 2008/09. Annual adjustment for VAT partial exemption calculations (April VAT year end). Liability to 2nd £100 penalty arises for 2008 Tax Return still not filed. 5% surcharge on any tax unpaid for 2007/08. Deadline for tax credit Annual Declaration (if estimated, final figures required by 31 January 2010).
August 2009
2	Last day for notifying car changes in quarter to 5 July - P46 (Car).
31	Annual adjustment for VAT partial exemption calculations (May VAT year end).
September 2009
30	End of CT61 quarterly period.
October 2009
1	Due date for payment of Corporation Tax for period ended 31 December 2008.
5	Individuals/trustees must notify HMRC of new sources of income/chargeability in 2008/09 if a Tax Return has not been received.
14	Due date for income tax for the CT61 quarter to 30 September 2009.
19/22	Quarter 2 2009/10 PAYE remittance due
31	Last day to file 2009 paper Tax Return.
November 2009
1	Please ensure you are retaining your documents for the 2010 Tax Return.
2	Quarterly submission date of P46 (Car) for quarter to 5 October.
December 2009
30	Last day to file your 2009 Tax Return electronically if you wish to have a 2008/09 balancing payment of less than £2,000 collected through your 2010/11 PAYE code.
31	Last day for non-EC traders to reclaim recoverable UK VAT suffered in the year to 30 June 2009. End of relevant year for taxable distance supplies to UK for VAT registration purposes. End of relevant year for cross-border acquisitions of taxable goods in the UK for VAT registration purposes. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 December 2008.
January 2010
1	Due date for payment of Corporation Tax for period ended 31 March 2009. Standard rate VAT reverts to 17.5%.
14	Due date for income tax for the CT61 quarter to 31 December 2009.
19/22	Quarter 3 2009/10 PAYE remittance due.
31	First self assessment payment on account for 2009/10. Capital gains tax payment for 2008/09. Balancing payment - 2008/09 income tax/class 4 NICs. Last day to renew 2009/10 tax credits. Deadline for amending 2007/08 Tax Return. Last day to file the 2009 Tax Return.
February 2010
1	£100 penalty if 2009 Tax Return not yet filed. Additional penalties may apply for further delay. Interest starts to accrue on 2008/09 tax not yet paid.
2	Quarterly submission date of P46 (Car) for quarter to 5 January.
14	Last date (for practical purposes) to request NIC deferment for 2009/10.
28	Last day to pay any balance of 2008/09 tax and Class 4 NIC to avoid an automatic 5% surcharge
March 2010
31	End of Corporation Tax financial year. End of CT61 quarterly period. Filing date for Corporation Tax Return Form CT600 for period ended 31 March 2009.

Do you like extra time and penalties? Companies now have less time and more penalties!

twettone@wmcca.co.uk (Tim Wettone) — Fri, 20 Mar 2009 10:12:00 -0700

Many of us enjoy the added excitement of extra time and penalties when watching a game of football.

There will now be added excitement for company directors, because the time allowed to file accounts at Companies House is being reduced from 10 months to 9 months for private companies. This will apply, broadly, to accounting periods ending 30 April 2009 onwards.

In addition, late filing penalties have been increased as from 1 February 2009 to a minimum of £150, rising to £375 between 1 and 3 months late, £750 between 3 and 6 months late, and £1,500 after 6 months. If this is the second offence, the penalties will double.

It is therefore essential that we receive records from clients in a timely manner to ensure that these new deadlines are adhered to.

Sadly, we suspect this will reduce the time allowed for watching games of football etc.

Pre-Budget Report 2008

twettone@wmcca.co.uk (Tim Wettone) — Tue, 25 Nov 2008 04:11:00 -0800

Set against a backdrop of global economic uncertainty, Chancellor Alistair Darling has announced a raft of measures in this year's much-anticipated Pre-Budget Report, aimed at stimulating the economy and boosting consumer confidence.

Emphasising the wider global recession, and highlighting the crisis in the banking system as the cause of economic slowdown in the UK, the Chancellor announced that borrowing will increase to £78bn this year, and revised his economic growth forecast from 2.5% to 0.75% for 2008.

The Chancellor unveiled a £20bn package, effective until April 2010, supposedly designed to help individuals and businesses to weather the storm. This includes some significant tax measures, with a cut in VAT from 17.5% to 15% for a period of 13 months, from 1 December.

The temporary increase in the basic personal tax allowance, worth £120 a year, has also been made permanent, and the tax reduction will rise to £145 in 2009/10. However, from 2011 those earning in excess of £150,000 a year will be subject to an income tax rate of 45%, and national insurance contributions will also rise by 0.5% from 2011.

The Chancellor announced help for businesses, in the form of a deferral of the 1p increase in corporation tax for small firms, and new measures allowing businesses to spread the payment of all taxes to HM Revenue & Customs. A temporary small business finance scheme worth £1bn will also be made available, and there will be an increase in the empty property relief threshold, as well as tax breaks for foreign dividends for medium and large firms.

Other measures announced include: additional support for mortgage holders; early increases in child benefit and the state pension; and a new state supported savings scheme. Meanwhile, duty on fuel, alcohol and tobacco will be increased to offset the reduction in VAT, and new rates of vehicle excise duty will be phased in over time.

Do please contact us for specific advice about how these announcements might affect you or your business.

Value Added Tax
- Changes to the standard rate of VAT
- Flat Rate Scheme entry rules
Measures for business
- Corporation tax: Small Companies’ Rate (SCR)
- Extension of trading loss carry back
- Finance for SMEs
- Empty Property Rate Relief
- Interest-free payment schedule for backdated business rates bills
- Income shifting
- Taxation of foreign profits
- New Business Payment Support Service
Personal measures
- Income tax
- National Insurance Contributions
- Pension savings
- Child benefit
- Child tax credit
- State Pension
- Saving Gateway scheme
- Mortgages
Green measures
- Fuel duty
- Vehicle Excise Duty
- Air Passenger Duty
What they said

This guide is for general information only. No responsibility is taken for any action taken or refrained from in consequence of its contents. Always seek professional advice before acting.

Value Added Tax (VAT)

Changes to the standard rate of VAT

In a move that will affect all businesses registered for VAT, the standard rate of VAT has been cut from 17.5% to 15%, effective from Monday 1 December 2008. The rate will remain at 15% until 1 January 2010 when it will revert to 17.5%.

Zero-rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at 5%, such as domestic fuel and power are not affected by this change.

Anti-forestalling legislation will be introduced in the 2009 Finance Bill to ensure that businesses are not able to use artificial arrangements to reduce the VAT rate on goods or services to be provided after the VAT rate reverts to 17.5% where there is no current economic activity. Genuine commercial transactions should not be affected.

The measure includes two consequential changes. Firstly, it amends the percentages used in the flat rate scheme for small businesses to reflect the reduction in the standard rate of VAT.

Secondly, it introduces a change to the timing of credit notes issued following a change of rate.

Operative date

The 15% rate will have effect for:

supplies of goods and services made on or after 1 December 2008;
imports on or after 1 December 2008; and
acquisitions of goods from other Member States on or after 1 December 2008.

The anti-forestalling legislation will have effect for arrangements entered into on or after 25 November 2008.

The consequential changes to the flat rate scheme percentages and the timing of credit notes will have effect on and after 1 December 2008.

Credit notes for payments received and VAT invoices issued in advance of 1 December 2008

Where payment has been received or a VAT invoice issued before 1 December 2008, VAT will have been charged at 17.5%. But where that payment or invoice relates to goods or services that are provided after 1 December 2008, the VAT rules allow the supplier to apply the new VAT rate, 15%, to the earlier payment or invoice.

Suppliers who choose this option are required to issue a credit note to their customer, if they have issued a VAT invoice, to evidence the credit for the reduction in VAT that is now due. The VAT Regulations specify that such a credit note must be provided to the recipient of the supply within 14 days after the change of rate. This time limit will be extended to 45 days.

Further information

Detailed information is provided in two supplementary documents:

These can be seen on the HMRC website at www.hmrc.gov.uk

Flat Rate Scheme entry rules

With effect from 1 April 2009, the test that requires a business to check that its total income is less than £187,500 for entry into the VAT Flat Rate Scheme will be removed. Instead, eligibility to join the scheme will be determined solely by the taxable turnover of the business, which must be less than £150,000.

Measures for business

A wide range of tax and other measures affecting businesses were announced by the Chancellor, with the stated aim of assisting businesses in the difficult economic climate.

Corporation tax: Small companies’ rate (SCR)

The Government had planned to increase the small companies’ rate (SCR) of corporation tax from 21% to 22% from 1 April 2009. However, this has now been deferred until 1 April 2010.

Legislation will now be introduced in the 2009 Finance Bill to maintain the SCR for all profits, apart from ring fence profits, at 21% from 1 April 2009 and effectively maintain the marginal rate (used to ‘smooth’ the difference between the main rate of corporation tax and the SCR) at 29.75%. Profits limits will remain the same.

Extension of trading loss carry back

The period for which current trading losses from businesses can be carried back against previous profits is to be extended from the current one year entitlement, to a period of three years, with losses being carried back against later years first.

The amount of losses that can be carried back to the preceding year is unlimited. After carry back to the preceding year, a maximum of £50,000 of the balance of unused losses is then available for carry back to the earlier two years.

This is a temporary measure for one year only. A company may make a loss relief claim under the new rules when it makes its return for an accounting period ending in the period 24 November 2008 to 23 November 2009.

Unincorporated businesses may make a loss claim under the new rules as soon as they have calculated their losses for their basis period for the 2008/09 tax year.

HMRC will make repayments arising from loss relief claims received under the new rules on or after Budget Day 2009.

Finance for SMEs

The Chancellor announced various measures designed to help SMEs with working capital and investment needs.

Early in 2009, the Government will launch a Small Business Finance Scheme - a new temporary guarantee scheme to enable up to £1 billion of new Government supported lending by banks.

The Export Credits Guarantee Department, in conjunction with the banks, will introduce a temporary guarantee scheme to support a £1 billion facility providing smaller exporters with better access to short-term working capital. The Government will also make available a capital fund of £50 million to convert SMEs’ debt into equity.

Earlier in November 2008, Advantage West Midlands, a Regional Development Agency (RDA), launched a transition fund for viable SMEs facing financial difficulties. Other RDAs will launch similar loan funds, now totalling £25 million, to help businesses over the next six months.

The Government has said that it ‘welcomes the commitment’ of UK lenders to approach the European Investment Bank (EIB) to access these funds. Following negotiations between UK banks and the EIB, £1 billion of EIB funds will be available to SMEs in the UK by the end of 2008.

Early in 2009, the Government will launch, in conjunction with Business Link, a new portal to direct credit-worthy SMEs who are experiencing problems accessing credit to the appropriate scheme.

Empty Property Rate Relief

The Government is temporarily increasing the threshold at which an empty property becomes liable for business rates. For the financial year 2009/10, empty properties with a rateable value of less than £15,000 will be exempt from business rates - exempting an estimated 70% of empty properties.

Interest-free payment schedule for backdated business rates bills

To reduce the cash flow impact on businesses, given current economic difficulties, the Government will legislate to give more time to pay certain backdated business rates bills issued before 31 March 2010. Businesses facing such bills will be able to pay their liability for previous years in equal interest-free instalments over 8 years, rather than immediately. Beneficiaries will include several occupiers of ports who have been affected by recent rating reviews.

Income shifting

The controversial proposed legislation designed to prevent ‘income shifting’ will not now be introduced in April 2009.

However, the Government has restated that it ‘firmly believes it is unfair’ to allow a minority of individuals to benefit financially from shifting part of their income to someone else who is subject to a lower rate of tax.

Taxation of foreign profits

The Government will bring forward a package of reforms to the taxation of foreign profits, with the object of making the UK a ‘more attractive location’ for multinational business. Measures will include an exemption from tax for most foreign dividends received by large and medium sized groups, regardless of the level of shareholding. The Government will also continue to examine options for reform of the Controlled Foreign Company (CFC) rules. Any reform will aim to improve the way the CFC rules achieve their objective of taxing profits diverted from the UK.

New Business Payment Support Service

HMRC has introduced a new Business Payment Support Service, which is designed to assist those businesses whose cash flow has been adversely affected by the economic downturn.

The service allows business owners who are concerned about making their tax, national insurance and other payments, to contact HMRC to discuss a range of payment options tailored to their business needs.

The scheme includes a Business Payment Support Line for new enquiries, which is available on 0845 302 1435, and is open from 8am to 8pm Monday to Friday, and 8am to 4pm at weekends.

Personal measures

Income tax

Following the compensation arrangements arising from the abolition of the 10% rate band, the Government will make permanent the £600 increase in the personal allowance with a further increase of £130 above indexation, meaning basic rate taxpayers pay £145 less a year in tax in 2009/10.

The basic rate limit for 2009/10 will be increased by £800 above indexation. The Chancellor announced the tax thresholds and personal allowances for 2009/10 as follows:

Income Tax	2008/09	2009/10
Starting rate band *	£2,320	£2,440
Tax rate	10%	10%
Basic rate band	£34,800	£37,400
Tax rate	20%	20%
Basic rate for dividend income	10%	10%
Higher rate - income over	£34,800	£37,400
Tax rate	40%	40%
Higher rate for dividend income	32.5%	32.5%

* 10% rate for savings income up to the starting rate limit within the basic rate band. Where taxable non-savings income does not fully occupy the starting rate band the remainder of the starting rate band is available for savings income.

Personal allowances
(age at the end of the tax year)
Under 65	£6,035	£6,475
65 - 74	£9,030	£9,490
75 and over	£9,180	£9,640
Higher allowances scaled back if income exceeds	£21,800	£22,900

From 2010/11, those with gross income in excess of £100,000 will lose some or all of their personal allowances. The basic allowance will be scaled back in two stages:

where gross income is between £100,000 and £140,000, to a minimum of 50%, and
where gross income exceeds £140,000, to a minimum of £0.

The scaling will be achieved by reducing the allowance by £1 for every £2 by which gross income exceeds the £100,000 and £140,000 thresholds.

Also announced for 2011/12 are new higher rates of tax:

for those with higher incomes, a tax rate of 45% will apply to savings and non-savings income over £150,000
a new 37.5% rate of tax will apply to taxable dividend income above £150,000
the rate of tax for trusts will be increased to 45%, with trust dividend income liable at 37.5%.

National Insurance Contributions

For 2009/10 the Upper Earnings Limit (UEL) for primary Class 1 National Insurance Contributions (NICs) will be aligned with the level at which people start to pay higher rate income tax. The UEL will therefore be £43,875 (2008/09 £40,040). This is equivalent to £844 per week (2008/09 £770).

The Class 1 and Class 4 rates of contribution remain unchanged until April 2011.

Class 2 NICs increase by 10p to £2.40 per week and Class 3 voluntary contributions go up by £3.95 to £12.05 per week. The Government is to reduce the burden on the self-employed by aligning the payment dates of Class 2 NICs with those for Self Assessment liabilities. This will reduce the number of bills issued. There will also be improved information to contributors.

For 2011/12, and thereafter, the Chancellor announced an increase of 0.5% to the main NIC rates:

the Class 1 primary (employee) rate increases to 11.5% on earnings between the primary and upper thresholds and to 1.5% thereafter
the Class 1 secondary (employer) rate increases to 13.3% on earnings over the primary threshold
Class 1A and Class 1B NICs will also increase to 13.3%
Class 4 NICs will increase to 8.5% (1.5% above the upper limit).

Pension savings

The limits on annual and lifetime investment have risen each year since 2006/07 and will continue to do so until 2010/11. The Chancellor announced that the limits will stay the same for the following five years - at £255,000 and £1.8 million.

Child benefit

The Chancellor announced that the increase in child benefit rates due in April 2009 will be brought forward to 5 January 2009.

The weekly rate for the first child will increase to £20, with the rate for other children increasing to £13.20 per week.

Child tax credit

Bringing forward promised increases in CTC, the Chancellor announced that the child element will increase to £2,235 from April 2009, while the disabled child element will increase at the same time to £2,670.

State Pension

The Chancellor announced that although the full State Pension will not rise to £95.25 per week until April 2009, it will make a payment of £60 to pensioners “in the new year”, equivalent to bringing forward the rise.

Also, the standard minimum income guarantee in Pension Credit will rise by £5.95 to £130 per week for single pensioners and by £9.10 to £198.45 a week for pensioner couples.

Saving Gateway scheme

A new state supported saving scheme, the Saving Gateway, is to be rolled out nationally in 2010, in a bid to encourage up to eight million low income earners to save money.

Under the scheme, the Government will contribute 50p for every £1 that is saved. A maximum payment of £300 will be made once an account holder has been saving for two years, and the contribution will only be applied for those months in which no withdrawals have been made.

The Saving Gateway will be available through a range of banks, building societies, credit unions, and the Post Office.

Mortgages

The Government has said it is committed to supporting households, through:

increasing the generosity of the Support for Mortgage Interest scheme
extending the Mortgage Rescue scheme to cover second charge lending
obtaining a commitment from major lenders not to initiate repossession action until at least three months after an owner occupier goes into arrears
better access to free and impartial debt advice.

Green measures

Fuel Duty

The Chancellor announced that the reduction in pump prices means the 2p per litre increase on fuel duty will take effect from 1 December 2008. Further increases of 1.84p per litre from 1 April 2009 and 0.5p per litre above indexation from 1 April 2010 will go ahead, as planned.

Vehicle Excise Duty

Six new bands of VED will be introduced in 2009, the Chancellor announced, taking the total to 13.

By 2010 the rate bands will start to separate out, with increases of up to £30 that year. Also due in 2010 is the First-Year Rate - the new higher Year One VED rate for new cars.

Air Passenger Duty

New air passenger duty rates will apply from 1 November 2009, based on four distance bands, and increase from 1 November 2010, when the maximum standard rate will stand at £170.

What they said…

In these exceptional economic circumstances, I want to take fair and responsible steps to protect and support businesses and people now - while putting the public finances on the right path for the future.
Chancellor of the Exchequer, Alistair Darling

Listening to the Chancellor's speech, no one can be in any doubt that the Prime Minister's claim to have abolished boom and bust is one of the biggest deceits ever told to the British public.
Shadow Chancellor, George Osborne

If I were marking the Chancellor’s report card, I’d say ‘could do better’.
David Frost, British Chambers of Commerce

Many of these measures […] will give small businesses a welcome breather from the taxman and allow them to concentrate on sustaining their business, supporting their staff and growing the economy in the long term.
John Walker, Federation of Small Businesses

Wettone Matthews

WE HAVE MOVED!

Emergency Budget 2010

Contents

Budget Highlights

Osborne unveils 'tough' Budget but declares Britain 'open for business'

Budget Highlights

The deficit

Business Tax and Investment Incentives

Corporation Tax

Capital allowances

Consortium relief

Corporation tax reform

Business finance

Anti-avoidance

Carers

Office of Tax Simplification

Capital taxes

Capital Gains Tax (CGT)

Entrepreneurs' Relief

Trusts

Inheritance tax (IHT)

Duties

Aviation taxation - per plane duty

Cider duty

Landline duty

National Minimum Wage (NMW)

Income Tax and Personal Savings

Income tax rates

Personal allowances (ages are as at the end of the tax year)

Individual Savings Accounts (ISAs)

Furnished Holiday Lettings (FHL)

Non-domiciliaries

Life insurance deficiency relief

Managed Payment Plans

Income tax adjustments between settlors and trustees

Pension savings

Value Added Tax

Change to the standard rate of VAT

VAT flat rate scheme

Lennartz accounting

Tax and Travel

Car and fuel benefits

Future changes

VAT on fuel for private use in cars

Mileage rates

Car costs — Vehicle Excise Duty (VED) rates

Company vans

National Insurance Contributions (NICs)

Changes to NICs — What lies ahead?

Regional employer NICs holiday for new businesses

Other measures announced

Child Trust Fund

Saving Gateway

Bank Levy

Health in Pregnancy Grant

Penalties for late filing of returns and payment of tax

Council Tax

2010/11 Tax Calendar

Budget 2010 report

Contents

Budget Highlights

Pre-election Budget 'to support recovery and tackle the deficit'

Budget Highlights

Business Tax and Investment Incentives

Corporation Tax

Capital allowances

Loans to participators

PAYE schemes

Employer-supported childcare

Real Estate Investment Trusts (REITs)

Share schemes

Online services

Small business rate relief

Bank payroll tax

Capital taxes

Capital Gains Tax (CGT)

Entrepreneurs' Relief

Inheritance tax (IHT)

Duties