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Budget
PN 2
22 April 2009
2009-10 rates and allowances for VAT, Income tax, Capital Gains tax, Inheritance tax, Corporation tax on profits, National Insurance Contributions, the Working and Child Tax Credit, Guardian’s Allowance, stamp taxes and duties, transfers of shares and stocks, tobacco and alcohol duties, gambling tax, fuel duties, vehicle excise duties and tax relief for business expenditure on cars are set out below.
|
|
Current rate |
On and after 1 Jan 2010 |
|
Standard rate |
15% |
17.5% |
A reduced rate of VAT of 5% will apply to children’s car seat bases from 1 July 2009 (in line with the rate that already applies to children’s car seats).
The registration threshold for VAT will rise to £68,000 from 1 May 2009.
£ per year (unless stated) |
2008-09 |
Change |
2009-10 |
Income tax personal and age-related allowances* |
|||
|
Personal allowance (age under 65) |
£6,035 |
+£440 |
£6,475 |
|
Personal allowance (age 65-74) |
£9,030 |
+£460 |
£9,490 |
|
Personal allowance (age 75 and over) |
£9,180 |
+£460 |
£9,640 |
|
Married couple's allowance** (age 75 and over) |
£6,625 |
+£340 |
£6,965 |
|
Married couple's allowance** - minimum amount |
£2,540 |
+£130 |
£2,670 |
|
Income limit for age-related allowances |
£21,800 |
+£1100 |
£22,900 |
|
Blind person’s allowance |
£1,800 |
+£90 |
£1,890 |
Capital gains tax annual exempt amount |
|||
|
Individuals etc. |
£9,600 |
+£500 |
£10,100 |
|
Most trustees |
£4,800 |
+£250 |
£5,050 |
Individual inheritance tax allowance |
£312,000 |
+£13,000 |
£325,000 |
Pension schemes allowances |
|||
| Annual Allowance |
£235,000 |
+£10,000 |
£245,000 |
| Lifetime Allowance |
£1,650,000 |
+£100,000 |
£1,750,000 |
*As announced at the 2008 Pre-Budget Report
**Married couple's allowance is given at the rate of 10 per cent
2008-09 |
£ per year |
2009-10 |
£ per year |
|
Starting savings rate 10%** |
0-£2,320 |
Starting savings rate 10%** |
0-£2,440 |
|
Basic rate: 20% |
0-£34,800 |
Basic rate: 20% |
0-£37,400 |
|
Higher rate: 40% |
Over £34,800 |
Higher rate: 40% |
Over £37,400 |
*As announced at the 2008 Pre-Budget Report
** There is a 10p starting rate for savings income 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
£ per year (unless stated) |
2008-09 |
2009-10 |
|
£0 - £300,000 |
21 % |
21 %* |
|
£300,001 - £1,500,000 |
Marginal Relief |
Marginal Relief |
|
£1,500,001 or more |
28 % |
28 % |
*The 2008 Pre-Budget Report announced that a rise in the small companies' rate to 22% would be deferred until 2010-11.
£ per week (unless stated) |
2008-09 |
Change |
2009-10 |
|
Lower earnings limit, primary Class 1 |
£90 |
+£5 |
£95 |
|
Upper earnings limit, primary Class 1 |
£770 |
+£74 |
£844 |
| Upper Accruals Point |
N/A |
N/A |
£770 |
|
Primary threshold |
£105 |
+£5 |
£110 |
|
Secondary threshold |
£105 |
+£5 |
£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 |
1.6% |
- |
1.6% |
|
Employees’ contracted-out rebate - money-purchase schemes |
1.6% |
- |
1.6% |
|
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 |
12.8% |
- |
12.8% |
|
Employers’ contracted-out rebate, salary-related schemes |
3.7% |
- |
3.7% |
|
Employers’ contracted-out rebate, money-purchase schemes |
1.4% |
- |
1.4% |
|
Class 2 rate |
£2.30 |
+£0.10 |
£2.40 |
|
Class 2 small earnings exception (per year) |
£4,825 |
+£250 |
£5,075 |
|
Special Class 2 rate for share fishermen |
£2.95 |
+£0.10 |
£3.05 |
|
Special Class 2 rate for volunteer development workers |
£4.50 |
+£0.25 |
£4.75 |
|
Class 3 rate (per week) |
£8.10 |
+£3.95 |
£12.05 |
|
Class 4 lower profits limit (per year) |
£5,435 |
+£280 |
£5,715 |
|
Class 4 upper profits limit (per year) |
£40,040 |
+£3,835 |
£43,875 |
|
Class 4 rate between lower profits limit and upper profits limit |
8% |
- |
8% |
|
Class 4 rate above upper profits limit |
1% |
- |
1% |
* As announced at the 2008 Pre-Budget Report
£ per year (unless stated) |
2008-09 |
Change |
2009-10 |
Working Tax Credit
|
|||
|
Basic element |
£1,800 |
+£90 |
£1,890 |
|
Couple and lone parent element |
£1,770 |
+£90 |
£1,860 |
|
30 hour element |
£735 |
+£40 |
£775 |
|
Disabled worker element |
£2,405 |
+£125 |
£2,530 |
|
Severe disability element |
£1,020 |
+£55 |
£1,075 |
|
50+ Return to work payment (16-29 hours) |
£1,235 |
+£65 |
£1,300 |
|
50+ Return to work payment (30+ hours) |
£1,840 |
+£95 |
£1,935 |
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 |
£2,085 |
+£150 |
£2,235 |
|
Disabled child element |
£2,540 |
+£130 |
£2,670 |
|
Severely disabled child element |
£1,020 |
+£55 |
£1,075 |
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 |
£15,575 |
+£465 |
£16,040 |
|
Income disregard |
£25,000 |
- |
£25,000 |
*As announced at the 2008 Pre-Budget Report
Guardian’s Allowance rates from 6 April*
£ per week |
April 2008 |
Change |
April 2009 |
|
Guardian’s Allowance |
£13.45 |
+0.65 |
£14.10 |
* As announced at the 2008 Pre-Budget Report
Transfers of land and buildings (consideration paid)
The stamp duty land tax (SDLT) holiday, which exempts residential properties up to the value of £175,000 from SDLT, is extended until 31 December 2009.
From 1 January 2010, the zero and 1% rates apply as per the table below:
Rate
|
Residential in disadvantaged areas |
Residential outside disadvantaged areas |
Non-residential |
|
|
Total value of consideration |
||
|
Zero |
£0 - £150,000 |
£0 - £125,000 |
£0 - £150,000 |
|
1% |
Over £150,000 - £250,000 |
Over £125,000 - £250,000 |
Over £150,000 - £250,000 |
|
3% |
Over £250,000 - £500,000 |
Over £250,000 - £500,000 |
Over £250,000 - £500,000 |
|
4% |
Over £500,000 |
Over £500,000 |
Over £500,000 |
The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2009-10.
On 22 April 2009, tobacco duty rates will be:
Product |
Current Duty |
Duty on 22 April 2009 |
|
Cigarettes |
24 per cent of the retail price plus £112.07 per thousand cigarettes |
24 per cent of the retail price plus £114.31 per thousand cigarettes |
|
Cigars (per kilogram) |
£169.74 |
£173.13 |
|
Hand-rolling tobacco (per kilogram) |
£122.01 |
£124.45 |
|
Other smoking tobacco and chewing tobacco (per kilogram) |
£74.63 |
£76.12 |
The impact of the tobacco duty changes is shown in the table below
Product |
Typical unit |
Excise duty including VAT at 15% on duty |
|
Cigarettes (premium) |
Packet of 20 |
7 pence |
|
Cigars |
Packet of 5 |
3 pence |
|
Hand-rolling tobacco |
25g |
7 pence |
|
Other smoking tobacco and chewing tobacco |
25g |
4 pence |
On 23 April 2009, duties on alcohol will be:
|
|
Current |
On 23 April 2009 |
Rate per litre of pure alcohol |
||
|
Spirits |
£22.20 |
£22.64 |
|
Spirits-based ready to drink |
£22.20 |
£22.64 |
|
Wine and made-wine: Exceeding 22% abv |
£23.05 |
£22.64 |
Rate per hectolitre per cent of alcohol in the beer |
||
|
Beer |
£16.15 |
£16.47 |
Rate per hectolitre of product |
||
|
Still cider and perry: Exceeding 1.2% - not exceeding 7.5% abv. |
£31.21 |
£31.83 |
|
Still cider and perry: Exceeding 7.5% - less than 8.5% abv. |
£46.83 |
£47.77 |
|
Sparkling cider and perry: Exceeding 1.2% - not exceeding 5.5% abv. |
£31.21 |
£31.83 |
|
Sparkling cider and perry: Exceeding 5.5% - less than 8.5% abv. |
£203.14 |
£207.20 |
|
Wine and made-wine: Exceeding 1.2% - not exceeding 4% abv. |
£64.65 |
£65.94 |
|
Wine and made-wine: Exceeding 4% - not exceeding 5.5% abv. |
£88.90 |
£90.68 |
|
Still wine and made-wine: Exceeding 5.5% - not exceeding 15% abv. |
£209.82 |
£214.02 |
|
Wine and made-wine: Exceeding 15% - not exceeding 22% abv. |
£279.74 |
£285.33 |
|
Sparkling wine and made-wine: Exceeding 5.5% - less than 8.5% abv. |
£203.14 |
£207.20 |
|
Sparkling wine and made-wine: 8.5% and above - not exceeding 15% abv. |
£268.75 |
£274.13 |
The impact of the alcohol duty changes is shown in the table below
Product |
Typical unit
|
Excise duty including VAT at 15% of the duty |
|
Beer @ 4.2% abv |
pint |
1p |
|
Wine |
75cl bottle |
4p |
|
Sparkling wine |
75cl bottle |
5p |
|
Spirits @ 37.5% abv |
70cl bottle |
13p |
|
Spirits-based ready to drink |
275ml bottle |
1p |
|
Cider & perry |
litre |
1p |
From 4pm on 22 April 2009, rates of all categories of amusement machine licence duty (AMLD) will increase.
AMLD (£) after increase - months for which licence granted |
Category A
|
Category B1
|
Category B2
|
Category B3
|
Category B4
|
Category C
|
|
1 |
500 |
255 |
200 |
200 |
180 |
80 |
|
2 |
985 |
490 |
385 |
385 |
350 |
145 |
|
3 |
1475 |
735 |
585 |
585 |
530 |
220 |
|
4 |
1965 |
985 |
775 |
775 |
705 |
290 |
|
5 |
2465 |
1230 |
970 |
970 |
875 |
365 |
|
6 |
2955 |
1475 |
1160 |
1160 |
1050 |
435 |
|
7 |
3445 |
1720 |
1355 |
1355 |
1225 |
505 |
|
8 |
3935 |
1965 |
1550 |
1550 |
1405 |
580 |
|
9 |
4430 |
2215 |
1745 |
1745 |
1580 |
655 |
|
10 |
4920 |
2465 |
1935 |
1935 |
1755 |
725 |
|
11 |
5410 |
2710 |
2130 |
2130 |
1930 |
795 |
|
12 |
5625 |
2815 |
2215 |
2215 |
2010 |
830 |
For accounting periods starting on or after 1 April 2009 gaming duty bands will be revalorised to the following:
Marginal Tax Rate |
15% of first |
20% of next |
30% of next |
40% of next* |
|
Current Bands |
£1,911,000 |
£1,317,000 |
£2,307,000 |
£4,869,500 |
|
Revalorised Bands |
£1,929,000 |
£1,329,500 |
£2,329,000 |
£4,915,500 |
*50% will be charged on the remainder of Gross Gaming Yield
On 27 April 2009 participation fees for bingo and player-to-player gaming in casinos will no longer be subject to VAT.
For accounting periods starting on or after 27 April 2009 bingo duty will increase to 22%.
On 27 April 2009 player-to-player gaming in casinos will be brought into the gaming duty regime.
The Government will consult on moving the taxation of gaming machines onto a gross profits tax basis.
Pence per litre (unless stated) |
Duty rate pre-1 April 2009
|
From 1 April 2009* |
From 1 September 2009 |
||
Change |
New duty rate |
Change |
New duty rate |
||
|
Ultra-low sulphur petrol/diesel |
52.35p |
+1.84p |
54.19p |
+2p |
56.19p |
|
Sulphur-free petrol/diesel |
52.35p |
+1.84p |
54.19p |
+2p |
56.19p |
|
Biodiesel |
32.35p |
+1.84p |
34.19p |
+2p |
36.19p |
|
Bioethanol |
32.35p |
+1.84p |
34.19p |
+2p |
36.19p |
|
Liquefied petroleum gas used as road fuel |
20.77p per kg |
+4.05p per kg |
24.82p per kg |
+2.85p per kg |
27.67p per kg |
|
Natural gas used as road fuel |
16.60p per kg |
+2.66p per kg |
19.26 p per kg |
+2.9p per kg |
22.16p per kg |
|
Rebated gas oil (red diesel) |
10.07p |
+0.35p |
10.42p |
+0.38p |
10.80p |
|
Fuel Oil |
9.66p |
+0.34p |
10.00p |
+0.37p |
10.37p |
*As pre-announced at Budget 2007 and confirmed at the 2008 Pre-Budget Report
VED band |
CO2 emissions (g/km) |
Change from 2008-09 to 2009-10 |
Standard rate 2009-10** |
Standard rate 2010-11** |
|
A |
Up to 100 |
£0 |
£0 |
£0 |
|
B |
101-110 |
£0 |
£35 |
£20 |
|
C |
111-120 |
£0 |
£35 |
£30 |
|
D |
121-130 |
£0 |
£120 |
£90 |
|
E |
131-140 |
£0 |
£120 |
£110 |
|
F |
141-150 |
+£5 |
£125 |
£125 |
|
G |
151-165 |
+£5 |
£150 |
£155 |
|
H |
166-175 |
+£5 |
£175 |
£180 |
|
I |
176-185 |
+£5 |
£175 |
£200 |
|
J |
186-200 |
+£5 |
£215 |
£235 |
|
K*** |
201-225 |
+£5 |
£215 |
£245 |
|
L |
226-255 |
+£5 |
£405 |
£425 |
|
M |
Over 255 |
+£5 |
£405 |
£435 |
* As announced at the 2008 Pre-Budget Report
**Alternative fuel discount: 2009-10, A-I £20, J-M £15; 2010-11 onwards, £10 all cars
***Includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006
VED band |
CO2 emissions (g/km) |
First-year rate 2010-11** |
|
A |
Up to 100 |
£0 |
|
B |
101-110 |
£0 |
|
C |
111-120 |
£0 |
|
D |
121-130 |
£0 |
|
E |
131-140 |
£110 |
|
F |
141-150 |
£125 |
|
G |
151-165 |
£155 |
|
H |
166-175 |
£250 |
|
I |
176-185 |
£300 |
|
J |
186-200 |
£425 |
|
K |
201-225 |
£550 |
|
L |
226-255 |
£750 |
|
M |
Over 255 |
£950 |
* As announced at the 2008 Pre-Budget Report
**Alternative fuel discount: 2010-11 onwards, £10 all cars
VED band |
Change from 2008-09 to 2009-10 |
2009-10 rate |
2010-11 rate
|
|
Up to 1549cc |
+£5 |
£125 |
£125 |
|
Over 1549cc |
+£5 |
£190 |
£205 |
* As announced at the 2008 Pre-Budget Report
VED band |
Change from 2008-09 to 2009-10 |
2009-10 rate |
2010-11 rate |
|
Euro 4** & 5*** discount rate |
+£5 |
£125 |
£125 |
|
Standard rate |
+£5 |
£185 |
£200 |
*As announced at the 2008 Pre-Budget Report
**for Euro 4 compliant vans registered between 1 March 2003 and 31 December 2006
***for Euro 5 compliant vans registered between 1 January 2009 and 31 December 2010
VED band |
Change from 2008-09 to 2009-10 |
2009-10 rate |
|
Up to 150cc |
- |
£15 |
|
151-400cc |
- |
£33 |
|
401-600cc |
- |
£48 |
|
Over 600cc |
- |
£66 |
*As announced at the 2008 Pre-Budget Report
VED band |
Change from 2008-09 to 2009-10 |
Standard rate 2009-10 |
Reduced Pollution Certificate Rate 2009-10 |
|
A |
- |
£165 |
£160 |
|
B |
- |
£200 |
£160 |
|
C |
- |
£450 |
£210 |
|
D |
- |
£650 |
£280 |
|
E |
- |
£1,200 |
£700 |
|
F |
- |
£1,500 |
£1,000 |
|
G |
- |
£1,850 |
£1,350 |
* As announced at the 2008 Pre-Budget Report
Further details of changes in 2009-10 (and, where indicated, later years) are set out below:
As announced at the 2008 Pre-Budget Report the personal allowance for under 65s will increase above indexation to £6,475.
Age related allowances have been increased in line with inflation to £9,490 for people aged between 65-74 and to £9,640 for those aged 75 and over. This will mean that in 2009-10 no one aged 65 or over need pay tax on an income of up to £183 a week.
The basic rate of tax will remain at 20p, and the higher rate of tax will remain at 40p.
As announced at the 2008 Pre-Budget Report the starting point for employers', employees' and self employed National Insurance Contributions (NICs) will increase in line with inflation to £110. The upper earnings and profits limits for Class 1 and Class 4 NICs respectively will increase from 2009 from £770 to £844 per week. For the self-employed, the rate of Class 2 contributions will increase to £2.40 a week.
The capital gains tax (CGT) annual exempt amount increased in line with statutory indexation to £10,100 for the tax year 2009-10 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees is increased to £5,050.
Every husband, wife, civil partner and child has his or her own £10,100 annual exempt amount.
For capital gains above the annual exempt amount the CGT rate for 2009-10 will continue to be 18 per cent.
There is currently a one ninth non-payable dividend tax credit available for UK individuals receiving dividends from UK resident companies or from shareholdings of less than 10 per cent in foreign companies. For these individuals, higher rate taxpayers are liable to tax at 32.5 per cent but in practice only pay 25 per cent (of the net dividend) because part of the tax liability is covered by the tax credit. Basic rate taxpayers are liable to tax at 10 per cent but in practice do not pay any tax on dividends from UK companies because the tax liability is entirely covered by the tax credit.
As announced at Budget 2008, the non-payable dividend tax credit will be extended from 22 April 2009 to investors with a shareholding of 10 per cent or more in a non-UK resident company, unless the source country does not levy a tax on corporate profits similar to corporation tax. The credit will also be extended to all dividends from offshore funds, except for distributions from offshore funds with more than 60 per cent of interest bearing assets, which will be taxed as interest.
As announced in Budget 2006, the inheritance tax allowance increased in 2009-10 to £325,000 for individuals or £650,000 for married couples and civil partners. The value of estates over and above the allowance is taxed at 40 per cent. The proportion of estates left on death in 2009-10 which are expected to be liable for inheritance tax is 2 per cent.
At Budget 2008, it was announced that in April 2009 the Child Benefit eldest/only child rate would increase above inflation to £20.00, and the rate for other children would increase in line with inflation to £13.20. At the 2008 Pre-Budget Report, these rises were brought forward from April 2009 to January 2009.
As announced at the 2008 Pre-Budget Report, on 6 April 2009 all elements of the Working Tax Credit (WTC), apart from the childcare element, increased in line with inflation. The limits on eligible childcare costs in the childcare element remain at £175 for one child and £300 for two or more children. The proportion of childcare costs payable through the childcare element of WTC remains at 80%. As announced at the 2008 Pre-Budget Report, the child element of the Child Tax Credit (CTC) increased by £75 above average earnings indexation. This included the Government’s commitment to increase the child element by £50 above indexation in April 2009, and also brought forward the Government’s commitment to increase the child element by £25 above indexation in April 2010 to April 2009. The elements for disabled children and severely disabled children increased in line with inflation. The family element and baby addition remain unchanged. As announced at the 2008 Pre-Budget Report, the income threshold for receiving maximum CTC only increased to £16,040, equivalent to the effective threshold for lone parents and couples receiving both WTC and CTC. The threshold for receiving maximum WTC remains at £6,040, and the threshold for receiving maximum family element of CTC remains at £50,000. The withdrawal rate for the family element remains at 6.67%, and for the rest of tax credits at 39%. The disregard for changes in income during the tax year remains at £25,000. Stamp duty land tax (SDLT)
On the 2 September 2008 a SDLT holiday was announced, increasing the starting rate of SDLT for residential property to £175,000. This was due to expire on 3 September 2009. Budget 2009 announces that this will be extended until 31 December 2009.
Changes to this year’s VED rates will take effect from 1 May 2009.
On 1 May 2009, new emissions based VED bandings will be introduced for all cars registered on or after 1 March 2001. Full rates are set out in the table above.
Both VED rates for cars and light goods vehicles registered before 1 March 2001 will increase by £5 in 2009. In 2010, the higher rate will increase by £15 and the lower rate will be frozen.
The standard VED rate for light goods vehicles registered on or after 1 March 2001 will increase by £5 in 2009. The discounted rate for eligible light goods diesel vehicles achieving early compliance with Euro 4 and 5 emissions standards will also be increased by £5. In 2010, the standard rate will be increased by £15 and the discounted rate will be frozen.
VED rates for motorbikes, Heavy Goods Vehicles (HGVs), Special Types Vehicles, Combined Transport vehicles and all related vehicles will be frozen in 2009.
New rules for tax relief for business expenditure on cars were announced on 1 April. These take effect from 1 April 2009 for businesses in the charge to Corporation Tax and 6 April 2009 for businesses in the charge to Income Tax. The rate at which qualifying expenditure on cars can be written down against profits will depend on the car's CO2 emissions. Expenditure on cars with CO2 emissions exceeding 160 g/km will be allocated to the special rate capital allowances pool and attract 10% writing-down allowance (WDA). Expenditure on cars with CO2 emissions of 160g/km or less will attract 20% WDA in the main plant and machinery pool. The associated rules which disallow a proportion of car lease rental payments have also been amended in line with the new capital allowances rules.
1. Section 41 of the Tax Credits Act requires a report to be laid before Parliament each year reviewing the amounts of certain tax credit elements and thresholds. Section 145 of the Social Security Contributions and Benefits Act 1992 requires an annual review of Child Benefit rates. Section 150 of the Social Security Administration Act 1992 requires the weekly rate of Guardian’s Allowance to be increased in line with prices
Further information and all published documents relating to Budget 2009 may be found on the Internet at the following addresses:
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