At a Glance : Budget 2009
Individuals
From 2010/2011 there will be an additional higher rate tax band of 50% for taxable income above £150,000. This has increased from 45% as announced in the pre-budget report.
From 2010/2011 the basic personal allowance will be gradually reduced for individuals with income above £100,000.
For the calculation of car benefits for 2011-12 onwards, the lower emissions threshold is to be reduced to 125g/km and the cap on the car price of £80,000 used in the calculation is to be abolished.
Businesses
There will be a temporary first-year allowance (FYA) for expenditure on plant and machinery of 40% on top of the current Annual Investment Allowance (AIA) of £50,000 per annum. This is available on expenditure incurred in the 12 months starting on 6 April 2009.
From 2009/2010 new car expenditure will qualify for writing down allowances at 20% if the car emissions are less than 160 g/km and 10% otherwise. The reduction in allowance which applies to leased cars will be 15% for cars with emissions over 160g/km.
The ability to carry trading losses back against profits of the previous 3 years has been extended for another year. This is now available for companies with accounting periods ending in the period 24 November 2008 to 23 November 2010 and for the tax years 2008/2009 and 2009/2010 for unincorporated businesses.
The standard rate of VAT will return to 17.5% from 1 January 2010.
From April 2011 taxpayers will be permitted to move to Managed Payment Plans (MPPs) for their tax liabilities. They will be permitted to make monthly payments of their overall liability over a period straddling the due payment date without incurring interest or penalty.
Stamp Duty Land Tax
Extension of ‘holiday’ from Stamp Duty Land Tax to 31 December 2009, for residential properties costing no more than £175,000.
Inheritance Tax
Inheritance Tax Agricultural Property Relief and Woodlands Relief will now be extended to apply to relevant property in the European Economic Area. This provision will take effect from 22 April 2009 but repayments may be available in respect of earlier periods where Inheritance Tax has been paid.
Pensions & Savings
From 22 April 2009, individuals who have earned more than £150,000 per annum in the current or previous two tax years and contribute more than £20,000 into their pension plan will have restricted tax relief on contributions in excess of £20,000 if they increase their pension savings over and above their normal pattern of savings.
Individual Savings Account (ISA) limits have been raised to £10,200, of which £5,100 can be saved in cash. These new rates will apply to people aged 50 or over from 6 October 2009 and everyone from 2010/2011 onwards.
From April 2010 the government will make payments of £100 per year into Child Trust Funds of all disabled children. Severely disabled children (receiving the high care element of Disability Living Allowance) will receive £200 per year. Payments will not count towards the usual £1,200 yearly contribution limit.