Pre-Budget 2009 (summary)

Pre-Budget Report 2009 - highlights

 

CORPORATE TAX


  • No change in the 28 per cent main rate of corporation tax.
  • Deferral of the increase in the small companies' rate from 21 per cent to 22 per cent by a year to April 2011.
  • A Code of Practice for certain financial sector companies to encourage good governance and open relationships with HM Revenue & Customs (HMRC).
  • A disallowance of the new bank payroll tax costs in computing taxable profits.
  • Consultation on a reduced rate of corporation tax on income from patents from April 2013.
  • A simplification of the R&D tax relief rules for small and medium sized enterprises such that intellectual property deriving from the R&D does not have to be owned by the claimant company.
  • Uncertainty continues in relation to the future of the UK's Controlled Foreign Companies regime with an outline document on the new regime now due "early in the New Year".
  • Various welcome simplifications to the worldwide debt cap have been proposed. 

 

EMPLOYMENT TAX


  • A further 0.5 per cent increase in the rate of employer, employee, and self-employed NICs from April 2011 to 13.8 per cent, 12 per cent and 9 per cent respectively. The additional uncapped rate of employee NICs increases to 2 per cent, also from April 2010.
  • A temporary (initially from today to 5 April 2010) bank payroll tax of 50 per cent to be due from certain financial sector employers on discretionary bonuses above £25,000 per employee.
  • Restriction of the tax exemption for workplace canteens if used in connection with salary sacrifice or flexible benefits arrangements.
  • Company car tax to increase from April 2012 by virtue of a reduction in the CO2 emissions thresholds, fuel charges also increase.

INDIRECT TAX


  • The temporary reduction in the standard rate of VAT from 17.5 per cent to 15 per cent will end on 31 December 2009 as previously announced.


PERSONAL TAX


  • No specific measures to prevent acceleration of income before 6 April 2010 to escape the 50 per cent tax rate.
  • The inclusion of employer pension contributions within gross income for calculating restrictions on pensions tax relief for those with gross incomes over £150,000.
  • The anti-forestalling arrangements in relation to the restrictions on pensions tax relief will now apply to gross incomes over £130,000 (before employer pension contributions).
  • A freeze in the threshold for the 40 per cent rate of income tax in 2012/13.
  • A freeze in the inheritance tax allowance of £325,000 in 2010/11.

OTHER MEASURES


  • Extension of the Business Payment Support Service that assists businesses in temporary financial difficulties by allowing them more time to meet tax costs.
  • A wide variety of individually small new measures to provide additional support for low carbon growth.
  • A requirement to notify HMRC of offshore bank accounts opened in certain jurisdictions.
  • Combined penalties for evading tax offshore will be increased up to 200 per cent of the unpaid tax.