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News
Monday, December 1st 2008 Nowadays, the PBR has become more of a second Budget than a preview of the next year’s annual Budget and in view of the current challenging economic situation it was hardly surprising that this year’s PBR was no exception. These are some of the headline-grabbing highlights: VAT The VAT rate is reduced from 17.5% to 15% with effect from 1 December 2008 until 31 December 2009. The VAT “fraction” changes from 7/47 to 3/23 for that period. The rates applied to the Flat Rate Scheme are revised. PERSONAL TAX For 2009/10 the personal tax allowance increases to £6,475 and the basic rate tax limit to £37,400. For 2010/11 basic personal allowance will be reduced for those with incomes over £100,000 up to a maximum of 50% of the basic allowance and completely for those with incomes over £140,000. From April 2011 a new tax rate of 45% will be charged on income over £150,000. Class 1 and Class 4 NICs to be increased by 0.5% from April 2011. This increase will apply to the main rate and additional rate of contributions. It will also apply to the Class 1 employer rate and Class 1A and Class 1B contributions. CORPORATE TAX The proposed increase in the small companies’ rate of corporation tax has been postponed. It was scheduled to increase to 22% from April 2009. Now, the current rate of 21% will continue to apply from April 2009 to March 2010. For accounting periods beginning on or after 1 April 2009 the loan relationship rules applying to connected companies will be changed as regards late paid interest and the release of connected party trade debts. MISCELLANEOUS For one year only trading losses (up to a maximum of £50,000) may be carried back against profits of the previous three earlier years. The “one year” in question will be that ending between 24 November 2008 and 23 November 2009 for companies and that ending in the 2008/09 tax year for unincorporated businesses. HMRC’s “income shifting” rules originally intended for 2008 but deferred, appear to now be deferred still further. As expected, there are to be new rules on capital allowances on cars from April 2009. The maximum annual pension scheme contribution limit will be frozen at £255,000 from 2010/11 to 2015/16. The lifetime allowance will be frozen at £1.8 million for 2011/12 to 2015/16. HMRC have introduced a business payment support line intended to help businesses that are having difficulty meeting their tax liabilities. The purpose is to help these businesses agree a payment strategy. < Back to News Headlines |
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