Pre-Budget Report 2008

Alistair DarlingKey points for individuals and small businesses

Individuals
  • Income Tax personal allowance increase above indexation to £6,035 for 2008/09 to be made permanent and personal allowance to increase at a rate above indexation to £6,475 for 2009/10
  • Lower threshold for both employee’s class 1 National Insurance and the self employed class 4 National Insurance to remain below the Income Tax personal allowance at £5,715 for 2009/10
  • Income Tax basic rate band to increase at a rate above indexation from £34,800 for 2008/09 to £37,400 for 2009/10
  • Upper threshold for both employee’s class 1 National Insurance and the self employed class 4 National Insurance to be aligned with the higher rate Income Tax threshold for 2009/10
  • 0.5% increase in class 1 and class 4 National Insurance rates for 2011/12
  • New 45% Income Tax rate for non-dividend income and 37.5% dividend income tax rate for income over £150,000 from 2011/12
  • Trust income and dividends to be taxed at 45% and 37.5% from 2011/12
Businesses
  • VAT rate reduced from 17.5% to 15% from 1 December 2008 until 1 January 2010
  • Corporation Tax rate for small companies to remain at 21% for 2009/10 with the increase in the rate to 22% now deferred until 1 April 2010
  • Companies with accounting periods ending between 24 November 2008 and 23 November 2009 will be able to carry back trading losses for 2 extra years in addition to the standard 1 year. This will also apply to the accounts of sole traders and partnerships ending in tax year 2008/09. The carry back of trading losses for the 2 extra years will be limited to £50,000
  • New HM Revenue & Customs Business Payment Support Service to allow greater flexibility for businesses struggling  to pay their tax bills
  • Expensive car capital allowance rules to be scrapped for new vehicles for 2009/10 and replaced by a general 10% writing down allowance pool for cars with CO2 emissions of more than 160g/km
  • 0.5% increase in class 1 and class 4 National Insurance rates for 2011/12
  • New income shifting legislation will not now be introduced in Finance Bill 2009
  • Exemption from business rates for empty properties with a rateable value of under £15,000
For a copy of our  Pre-Budget Report Insight click HERE or  a copy of our  Special  Credit Crunch Insight click HERE or see our newsletters page for further details

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