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Pre budget report

Just in case you missed my email about it I’ve reproduced it below. This is not menat to be a comprehensive report on all that came out of the PBR, but hopefully covers the “interesting” bits:- Well, I did promise last week that I would let you have some highlights from today’s PBR, so below are some points that I think may be of interest to some or all of you. This is not meant to be a comprehensive summary of the measures announced. For example, much of the talk about spending, whilst important, has not been included in this email as I’ve tried to focus more on what might be seen to more directly affect you and your business. Of course you can always visit H M Treasury’s website if you want to read a full account of the speech and measures.

VAT: Well, he fooled me, by not only announcing that VAT will return to 17.5% on 1 January 2010 (not more), but that he had no other plans to announce for VAT at this point. However, if you are using the VAT Flat Rate scheme at present you will need to revise your sector rate in accordance with the new tables with effect from 1 January 2010. Don’t forget that if you are still in your first 12 months of registration and are using this scheme you get to reduce the sector rate by 1, so if your rate is 10% per the table, your actual rate is 9% until the first anniversary of your VAT registration. You will also find the HMRC guidance on what to do when your rate changes mid VAT period helpful (but please don’t hesitate to contact me if you need my help).

Corporation Tax: No real surprises here, the mainstream rate stays at 28% whilst the small companies rate will remain at 21% for a further year (originally it was intended to increase to 22%). It is intended that the 22% rate for small companies will now come into effect on 1 April 2011, a full 2 years after its original planned effective date. There is a new 10% rate of corporation tax for income earned from UK patents.

National Insurance: Already announced was an increase in national insurance for both employees and employers respectively of 0.5%, effective from 6 April 2011. However, there are to be no changes before then in rates or thresholds, save for the starting threshold of national insurance, which will increase from its current £95 per week to £97 per week from 6 April 2010. The self employed rates of national insurance are unchanged for next year as well.

Income Tax: No changes to be made next year to rates, thresholds and allowances already in place this year, but as already announced there will be a new tax rate coming into effect for individuals from 6 April next year of 50% for those with annual taxable income above £150,000. In his desire to curb banks large bonus payments to employees he has also announced a special one off levy of 50%, payable by the banks, on any discretionary bonus they award to an individual that is in excess of £25,000. With RBS recently stating it wanted to dish out bonuses of £1.5bn this could raise quite a bit for the Government across the banking sector.

Tax Relief on Cars & Vans: Electric cars will be exempt from company car tax for 5 years, whilst electric vans will qualify for a 100% write off against profits.

New Tax Free Income Source: If you are fortunate enough to own a wind turbine generating power for your home, and are in fact a net contributor of power back into the national grid, you will now be paid £900 per annum tax free! So if you don’t have one, its a pretty good incentive to get one as you wont just be saving on power costs, but the £900 per annum will go a long way to paying for the turbine!

Help for Businesses: A number of announcements that I’ve clumped together here for you;- The HMRC business payment support scheme has been extended indefinitely. If you do not know about this scheme already, and are struggling with any of your HMRC liabilities, give me a call.

Empty commercial properties, provided they have a rateable value less than £18,000, will remain to be exempt from business rates for 2010/11. If you are currently paying business rates on a qualifying empty property you need to take action – call me. £30m is being invested into industry in Teesside to try and provide work following the closure of Corus in Teesside.

Banks are to be further encouraged to do more to help small and medium business enterprises. The Enterprise Finance Guarantee Scheme introduced in January this year is to continue to be made available for another 12 months. For those of you not aware of this scheme, it is basically a government guarantee scheme for loans from banks to businesses that meet certain criteria. If you need more information please get in touch.

Going Green As part of the Governments ongoing drive to improve our Green credentials they intend to invest more into green energy (wind turbines etc..). Homes will also get smart meters, to help us control and monitor our energy consumption, the intent been that we should all have one by 2020. There will also be more money made available for the Warm Front Scheme from April 2010 (grants to aid things such as home insulation).

As the car scrapage scheme has worked well there will now be a similar boiler scrapage scheme to encourage the replacement of old inefficient household central heating boilers. I have not seen any specific details about this in the press releases today but no doubt we’ll hear more in the next few days.

State Pensions & Benefits Normally revised annually to reflect the prevailing rate of inflation in September (2009, minus 1.5%), the Chancellor has announced that these will be increased from 6 April 2010, despite the negative inflation rate. So pensions will go up by 2.5% and other state benefits by 1.5%. Tax credits are being increased too, but increases are small and not on all elements. If you need more details on tax credits send me an email.

Help for families & individuals The Support for Mortgage Interest Scheme is being extended for 6 months – this is aimed at helping homeowners with their mortgages where the owner has recently lost their job. Under 24′s are going to be guaranteed either work or training if they have been claiming Job Seekers allowance for 6 months. There is also going to be help for the over 50′s aimed at getting them back into work. For the over 65′s in employment the working tax credit minimum working hours will be reduced, thus enabling more working pensioners to claim working tax credit. Energy companies are being encouraged to give discounts on charges for low income families. Child benefit (what some of us may know as family allowance) will increase next year by 30p per week for the first child, 20p per week for each subsequent child.

Duties The favourite indirect taxation method of this government (in my humble opinion). You will not be surprised to learn that there is to be a new duty levied on all landline telephone lines of 50p per month, starting in October next year. This is to pay for the roll out of broadband internet to at least 90% of the UK population.

For those of you that are fans of Kelly’s Eye and Two Fat Ladies (am I allowed to say that?) you may be pleased to learn that Bingo duty is to reduce from 22% to 20% – though somehow I don’t think that will make much difference if you are a player.

Inheritance Tax No changes here either, with the exempt threshold remaining at £325,000.

And finally The public sector is going to see more economies as the Government drives to reduce costs. Amongst the measures announced or already taking place is the announcement that Public Sector pay rises will be capped at 1% from 2011. Well, I hope that you find the above of interest (well a little anyway). If you want to discuss any of these or indeed any other matters relating to tax etc., please do not hesitate to get in touch.


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One Response to “Pre budget report”

  1. merlin says:

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