2009 Budget
As usual a reasonably brief statement by the Chancellor of the Exchequer has been accompanied by literally hundreds of pages of press releases and detailed interpretation by HM Revenue & Customs.
The following brief extract will hopefully be of some interest:
1. Loss Relief
The extended carry-back for three years of trading losses capped at £50,000, now covers losses by unincorporated businesses arising in the each tax year 2008/09 and 2009/10 and for companies accounting periods ending in the 24 months from 24th November 2008 to 23rd November 2010.
2. VAT
The standard rate of VAT which is presently 15% will revert back to 17.5% on 1st January 2010. There are measures to prevent attempts to forestall the effect of the increase.
3. Capital Allowances
a) First Year Allowance
A temporary first year allowance of 40% will apply to qualifying expenditure in the year beginning 1st April 2009 for companies and the tax year from 6th April 2009 for unincorporated businesses. This allowance can be claimed after the Investment Allowance of 100% on the first £50,000 of qualifying expenditure. Do not forget expenditure on certain energy-saving and water efficient technologies may also qualify for 100% first year allowance.
Details on qualifying expenditure can be found on www.eca.gov.uk
b) Motor Vehicles
From 1st April 2009 for companies and 6th April 2009 for individuals, expenditure on cars will be allocated to two basic pools depending on the cars CO2 emissions. Cars under 160g/km will qualify for 20% capital allowances and those over 160g/km 10% capital allowances. Similarly leasing payments for cars under 160g/km will be allowed in full while leasing payments for cars over 160g/km will be disallowed by 15%.
There are more detailed issues to be considered and advice should be sought where applicable.
4. Personal Tax
The increased top rate tax band of 45% for incomes over £150,000 announced in the Pre Budget Report has been increased to 50% and brought forward one year to 6th April 2010. Careful note should be taken of the rules applicable to relief for pension contributions on incomes of £150,000 and above. Advice should be sought if you are likely to be affected by these provisions as they are complex and in the case of what is known as anti-forestalling provisions are applicable now. A higher rate of tax of 42.5% is applicable on the element of dividend income in the total over £150,000.
5. Individual Savings Accounts (ISA’s)
The limit is to be raised to £10,200 per annum from 6th April 2010 of which £5,100 can be deposited in cash. Individuals aged 50 and over in 2009/10 can take advantage of the new limits from 6th October 2009.
