A summary of the 2009 Pre-Budget Report (in less than 50 words)
50% employer tax on bank bonuses, a freeze on all tax rates and allowances, National Insurance increases from 2011.
No changes to equalise capital gains tax (CGT) rates, or change CGT Private Residence Relief. VAT increase at midnight, 31 December, as planned.
The highlights:
- A FREEZE on ALL* tax rates and allowances for 2010/11: so the 2009/10 rates apply to 2010/11. This means no rise in the small company tax rate. One small exception is that the employee NI lower earnings limit will increase by £2. * The 50% "super tax" rate will apply to those with incomes of £150,000 or more.
- National Insurance: no changes in 2010/11. From 2011/12 Employee's Class 1 increases from 11% (2010/11) to 12%, additional rate from 1% to 2%, Employer's Contibutions from 12.8% to 13.8%.
- Workplace Canteens: from 6 April 2011 the exemption for the benefit of free or subsidised meals will be restricted where an employee has an entitlement to employer-provided free or subsidised meals in conjunction with salary sacrifice or flexible benefits arrangements. The exemption remains intact in all other cases.
- Company car tax: From 6 April 2012 the current graduated table of company car tax bands will be extended down to a new 10 per cent band, and all CO2 emissions thresholds moved down by 5g/km. Reductions for electric cars as well.
- Cars and Vans Fuel Benefit: the tax charge for fuel is based on the appropriate percentage x £18,000 from 6 April 2010 (currently £16,900). Van fuel: £500 tax charge increase to £550 from 6 April 2010.
- Electric vans: from 6 April 2010 no taxable benefit for employees or Class 1A for employers. These vans qualify for 100% capital allowances from 1 April 2010 (they already qualfy for 100% allowances under the AIA for 2009/10).
- Pensions: a £130,000 floor is introduced in order to apply the anti-forstalling measures ahead of the 2011 changes, and as part of the test to calculate gross earnings.
- VAT Flat rate scheme: new percentages to apply from 1 January 2010.
- Bank payroll tax: banks will pay a new 50% tax on bonuses paid to employees. This applies from today.
- NEW TAXES Landline loops: a new tax from 2010, charged at rate of 50 pence per month on each “local loop”. HMRC and the Department for Business, Innovation and Skills will consult shortly on the implementation of the new duty.
Tax compliance
- Tax payments: time to pay scheme extended on same terms.
- Stamp Duty Land Tax: new in-year disclosure requirements for SDLT avoidance schemes.
- Various new anti-avoidance measures aimed at the tax avoidance industry and strengthening the disclosure regime.
Working with Tax Agents: the next stage
- Revised procedures for disclosure to the professional bodies in the case of misconduct.
- New legislation to tackle deliberate wrongdoing by tax agents; and "high volume" agents.
Travel schemes and National Minimum Wage (NMW): a review of how some travel schemes are used to claim tax relief on travel and use this to offset the NMW requirements.