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Pre Budget Report 2009

 Pre Budget Report 2009 Headlines
• Time to pay arrangements for businesses extended for "as long as necessary".
• Exemption for business rates to be extended into 201-2011 - for properties at a RV below £18,000
• Planned rise in corporation tax from 21% to 22% for small businesses has been deferred until 2011-12
• Over-65s will need to work fewer hours to qualify for WTC; unemployed over-50s to be given new training
• Bingo duty cut from 22% to 20%
• The VAT standard rate is returning to 17.5% on 1 January 2010 as planned.
• GDP growth next year will 1%-1.5%, 3.5% in 2011 and 3.5% in 2012. The 3rd qtr of 2009 saw GDP shrink 0.3%. 2009 will see the economy reduce by 4.7%.
• Inflation to fall back to 1.5% by end 2010
• Potential losses from government's intervention into banks will fall to £10bn, from an anticipated £50bn
• The budget deficit will be £178bn this year, only a little larger than predicted. Next year the deficit will fall by £2bn to £176bn. 2011 will see it fall to £140bn, 2012, £117bn and 2013, £96bn.
• Up to £160m to be invested in clean energy and low carbon technology, including £90m for green infrastructure projects
• A £500m capital growth fund to be set up to aid businesses struggling to get access to credit.
• The UK's net debt stands at 56% of GDP. The figure will rise next year to 65% and to 78% by 2014/2015
• Electric cars to be exempt from company car tax for the next five years. Tax allowances to be introduced for electric vans.
• Pharma and bio-tech patents profits will be taxed at a lower corporation tax rate of 10%
• Households to be charged 50p extra per month on landlines to help fund the expansion of faster broadband across the country.
• Up to 10,000 students from low income backgrounds to receive financial support and assisted to get into internships and businesses
• Pension tax relief to be cut for those earning over £150,000
• The individual inheritance tax threshold to be frozen at £325,000, married couples at £650,000
• Current spending growth of 0.8% to continue until 2014-2015
• Another clamp down on tax avoidance especially offshore accounts
• £5bn in public spending savings through outsourcing of prisons and reforming legal aid
• A one-off levy on banking bonuses of more than £25,000 expected to put raise £500m.
• No public spending review before the general election.
• £2.5bn to support military operations along with £5m set aside to help returned soldiers set up businesses.
• From 2011, National Insurance contributions will rise by 0.5% for all employer, employee and self-employed rates except for those paid less than £20,000, saving £3bn a year.


Value Added Tax

Value Added Tax (VAT) Current rateOn and after 
01-Jan-10
Standard rate 15%17.50%

VAT - Flat Rate Scheme

Sectoral rates for the VAT Flat Rate Scheme (FRS) are updated. Details of new sectoral rates are available on the HMRC website at www.hmrc.gov.uk. The FRS provides optional simplified VAT arrangements for businesses with turnover up to £150,000.

Corporation tax on profits

£ per year (unless stated) 2009-2010 2010-2011 
£0-£300,000 21%21%* 
£300,001 - £1,500,000 Marginal Relief Marginal Relief 
£1,500,001 or more 28%28%

* The planned small companies’ rate increase to 22% is deferred until 2011-12

Income tax allowances

Income tax allowances £ per year (unless stated) 2009-10 Change 2010-11 
Income tax personal and age-related allowances 
Personal allowance (age under 65) £6,475- £6,475
Personal allowance (age 65-74) £9,490- £9,490
Personal allowance (age 75 and over) £9,640- £9,640
Married couple's allowance* (age 75 and over) £6,965- £6,965
Married couple's allowance* - minimum amount £2,670- £2,670
Income limit for age-related allowances £22,900- £22,900
Blind person’s allowance £1,890- £1,890

*Married couple's allowance is given at the rate of 10 per cent

Income tax: taxable bands

2009-10 £ per year2010-11 £ per year
Starting savings rate: £0-£2,440Starting savings rate: 10%* £0-£2,440
10%* 
Basic rate: 20% £0-£37,400Basic rate: 20% £0-£37,400
Higher rate: 40% Over £37,400Higher rate: 40% £37,401-£150,000 

Additional rate: 50% 

Over £150,000

* There is a 10p starting rate for savings only. If an individual’s non-savings taxable income exceeds the starting rate limit, the 10p starting rate for savings will not be available for savings income.

Inheritance tax

Inheritance tax £ per year (unless stated) 2009-10 Change 2010-11 
Individual inheritance tax allowance £325,000- £325,000

Stamp taxes and duties

Transfers of land and buildings (consideration paid)

Rate Residential in Residential outside disadvantaged areas Non-residential 
disadvantaged areas
Total value of consideration 
Zero£0 - £150,000£0 - £125,000£0 - £150,000
after 31 December 2009after 31 December 2009
(£0 - £175,000(£0 - £175,000
until 31 December 2009)until 31 December 2009)
1%Over £150,000 - £250,000Over £125,000 - £250,000Over £150,000 - £250,000
after 31 December 2009after 31 December 2009
 (Over £175,000- £250,000 until 31 December 2009)
(Over £175,000- £250,000 until 31 December 2009) 
3%Over £250,000 - £500,000Over £250,000 - £500,000Over £250,000 - £500,000
4%Over £500,000Over £500,000

Over £500,000

Bingo duty

Bingo duty will be reduced to 20% at Budget 2010.

Landline Duty (on telephone landlines)

Landline Duty will be introduced at a rate of 50p per month for each line from 1 October 2010.

Vehicle Excise Duty for Motorcycles: 2010-11 rates

VED band Change from 2010-11 
2009-10 to 2010-11 rate 
Up to 150cc - £15
151-400cc - £33
401-600cc £2£50
Over 600cc £4£70

National insurance contributions

£ per week (unless stated) 

2009-10 

Change 

2010-11 

Lower earnings limit, primary Class 1 

£95

£2

£97

Upper earnings limit, primary Class 1 

£844

- 

£844

Upper Accruals Point 

£770

- 

£770

Primary threshold 

£110

- 

£110

Secondary threshold 

£110

- 

£110

Employees’ primary Class 1 rate between primary threshold and upper earnings limit 

11%

- 

11%

Employees’ primary Class 1 rate above upper earnings limit 

1%

- 

1%

Employees’ contracted-out rebate - salary-related schemes 

1.60%

- 

1.60%

Employees’ contracted-out rebate - money-purchase schemes 

1.60%

- 

1.60%

Married women’s reduced rate between primary threshold and upper earnings limit 

4.85%

- 

4.85%

Married women’s rate above upper earnings limit 

1%

- 

1%

Employers’ secondary Class 1 rate above secondary threshold 

12.80%

- 

12.80%

Employers’ contracted-out rebate, salary-related schemes 

3.70%

- 

3.70%

Employers’ contracted-out rebate, money-purchase schemes 

1.40%

- 

1.40%

Class 2 rate 

£2.40

- 

£2.40

Class 2 small earnings exception (per year) 

£5,075

- 

£5,075

Special Class 2 rate for share fishermen 

£3.05

- 

£3.05

Special Class 2 rate for volunteer development workers 

£4.75

£0.10

£4.85

Class 3 rate (per week) 

£12.05

- 

£12.05

Class 4 lower profits limit (per year) 

£5,715

- 

£5,715

Class 4 upper profits limit (per year) 

£43,875

- 

£43,875

Class 4 rate between lower profits limit and upper profits limit 

8%

- 

8%

Class 4 rate above upper profits limit 

1%

- 

1%

Working and Child Tax Credits rates

£ per year (unless stated) Apr-09Change Apr-10
Working Tax Credit
Basic element £1,890£30£1,920
Couple and lone parent element £1,860£30£1,890
30 hour element £775£15£790
Disabled worker element £2,530£40£2,570
Severe disability element £1,075£20£1,095
50+ Return to work payment (16-29 hours) £1,300£20£1,320
50+ Return to work payment (30+ hours) £1,935£30£1,965
Childcare element of the Working Tax Credit 
Maximum eligible cost for one child £175 per week- £175 per week
Maximum eligible cost for two or more children £300 per week- £300 per week
Percentage of eligible costs covered 80%- 80%
Child Tax Credit 
Family element £545- £545
Family element, baby addition £545- £545
Child element £2,235£65£2,300
Disabled child element £2,670£45£2,715
Severely disabled child element £1,075£20£1,095
Income thresholds and withdrawal rates 
First income threshold £6,420- £6,420
First withdrawal rate 39%- 39%
Second income threshold £50,000- £50,000
Second withdrawal rate 6.67%- 6.67%
First threshold for those entitled to Child Tax Credit only £16,040£150£16,190
Income disregard £25,000- £25,000

Child Benefit

£ per weekJan-09Change Apr-10
Eldest/Only Child £2030p £20.30
Other Children £13.2020p £13.40

Guardian's Allowance

£ per weekApr-09Change Apr-10
Guardian's Allowance £14.1020p £14.30