25/03/2010 Supplied by: Paul Stone of Ayres Bright Vickers






No changes to income tax rates or allowances for 2010/11. Next year’s rates will be the same as this year’s except for the introduction of the 50% income tax rate on taxable income over £150,000

The personal allowance will remain at £6,475. The personal allowance for those over 65 will remain at £9,490 and for those aged 75 and over at £9,640. However, allowances for all taxpayers will be reduced by £1 for every £2 of income above £100,000 creating an effective 60% rate for income between £100,000 and £112,950.

The basic rate of tax at 20% will be levied on taxable income up to £37,400. The 40% higher rate tax will be levied on income between £37,401 and £150,000 and the new 50% additional rate of tax will apply to taxable income above that figure.



A new relief will be introduced in the Finance Bill 2010 for certain vehicles provided by a company to an employee or director and which are available for private use;
 
•    Cars that cannot produce CO2 engine emissions under any circumstances when driven will have a benefit in kind at 0% of list price.
•    Cars which have an approved CO2 engine emission figure of 75g per km or less will have a benefit in kind at 5% of list price.
•    Vans that cannot produce CO2 engine emissions under any circumstances when driven will have no benefit in kind.

The above measure will have effect from 6 April 2010 until 5 April 2015.




The starting point for employers’, employees’ and self employed NICs will be maintained at £110 per week. The upper earnings and profit limits for Class 1 and Class 4 NICs respectively will also be maintained at their current level of £844 per week. Similarly the Class 2 Self employed contributions will continue to be at £2.40 per week. Class 3 contributions will also remain at their current rate of £12.05.

From 2011/12, Class 1 NICs rise by 1% to 12% for employees and 13.8% for employers. The increased rate will also apply to Class1A and 1B contributions.  Class 4 NICs will also be increased by the same amount to 9%.

The additional rate of Class 1 and 4 NICs payable on earnings above the upper earnings limit will also be increased by 1% to 2% from 2011/12.






Included in the Finance Bill 2010 will be provisions to double the CGT Entrepreneurs’ Relief lifetime limit to £2 million.  This will affect individuals and trustees of settlements where the disposal takes place after 6 April 2010 and means that for qualifying gains of up to £2 million, the effective rate of CGT is 10%.

 




The main rate of Corporation Tax will remain at the current rate of 28%.
 
The Small Companies Rate will remain at 21% for 2010/11.  The planned rise to 22%, which was previously expected to have effect from 1 April 2010, was not mentioned in this year’s Budget.
 
The thresholds for the small companies’ rate and the main rate remain at £300,000 and £1,500,000 respectively.
 
The marginal rate of corporation tax applying to profits between £300,000 and £1,500,000 will continue to be 29.75%.



The Annual Investment Allowance (AIA) provides for expenditure by a business on certain plant and machinery capital equipment to be written off in full as a tax deductible expense.
 
The current maximum of £50,000 will be doubled to £100,000 with effect from 1 April 2010 (where businesses are chargeable to corporation tax) and 6 April 2010 (where businesses are chargeable to income tax).



 
It was announced that small businesses in England whose premises have a rateable value of up to £6,000 will pay no business rates for one year from October 2010, and that those whose premises have a rateable value of up to £12,000 will receive significant reductions.
 


 
The VAT registration threshold will rise by £2,000 to £70,000 from 1 April 2010.  The de-registration limit rises similarly to £68,000.



 


Legislation will be included in the Finance Bill 2010 to increase the rate of Stamp Duty Land Tax to 5% on residential properties where the consideration exceeds £1 million.   This increased rate will apply to sales where completion takes place on or after 6 April 2011.



Legislation will be included in the Finance Bill 2010 to provide relief from SDLT on residential properties where the consideration is between £125,000 and £250,000.  This increased limit applies to completions taking place between 25 March 2010 and 25 March 2012 where the purchasers are first time buyers and will be occupying the property as their only or main home.

 

 
It was previously announced that the nil rate band for 2010/11 would not increase and would instead be frozen at the 2009/10 level of £325,000.
 
Legislation will now be introduced into the Finance Bill 2010 to extend this ‘frozen’ nil rate band for the next five years, setting the threshold at £325,000 from 6 April 2010 until the end of the tax year 2014/15.
 
The rate of Inheritance Tax remains at 40% on death estates and 20% for chargeable lifetime transfers.



 
Measures are to be introduced to complete the reform of the penalty regime for late filing of tax returns and late payment of tax.  Reform that has already taken place covers income, corporation, inheritance and other direct taxes.  The latest reform will cover VAT and other taxes.
 
In order to encourage timely filing and payment of tax the measures will introduce an escalating series of penalties depending on the number of failures within a set penalty period.  Further penalties will arise if there is a prolonged delay in filing returns or paying the tax due.
 
The Government aims to include the required legislation in a Finance Bill to be introduced as soon as possible in the next Parliament.