Pre-Budget Report Nov 2008 - Tax
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24 November 2008
Value added tax, income tax allowances, national insurance contributions,
child and working tax credit rates 2009-10 and other rates
2009-10 rates and allowances for Value Added Tax, Income Tax, National
Insurance Contributions, the Working and Child Tax Credits and Child
Benefit/Guardian’s Allowance, fuel duties and vehicle excise duties are set out
below.
Value Added Tax (VAT)
| |
Current rate
|
On and after 1 Dec 2008
|
On and after 1 Jan 2010
|
Standard rate
|
17.5% |
15% |
17.5% |
Income tax
£ 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* (aged less than 75 and born before 6th April
1935) |
£6,535 |
+£330 |
£6,865 |
| 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 |
+£1,100 |
£22,900 |
| Blind person’s allowance |
£1,800 |
+£90 |
£1,890 |
Pension schemes allowances
|
| Annual Allowance |
£235,000 |
+£10,000 |
£245,000 |
| Lifetime Allowance |
£1,650,000 |
+£100,000 |
£1,750,000 |
*Married couple's allowance is given at the rate of 10 per cent.
Income tax: taxable bands
2008-09
|
£ per year
|
2009-10
|
£ per year
|
| Starting savings rate 10%* |
£0-£2320 |
Starting savings rate 10% |
£0-£2440 |
| Basic rate: 20%* |
£0-£34,800 |
Basic rate: 20%* |
£0-£37,400 |
| Higher rate: 40%* |
Over £34,800 |
Higher rate: 40%* |
Over £37,400 |
* 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.
National insurance contributions
£ 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% |
Working and Child Tax Credits rates
£ per year (unless stated)
|
April 2008
|
Change
|
April 2009
|
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 |
Child Benefit rates (from 5 January 2009)
£ per week
|
April 2008
|
Change
|
Jan 2009
|
| Eldest/Only Child |
£18.80 |
+£1.20 |
£20.00 |
| Other Children |
£12.55 |
+£0.65 |
£13.20 |
Guardian’s Allowance rates
£ per week
|
April 2008
|
Change
|
April 2009
|
| Guardian’s Allowance |
£13.45 |
+£0.65 |
£14.10 |
Tobacco duty rates
From 6pm on 24 November 2008, tobacco duty rates will be:
Product
|
Duty
|
| Cigarettes |
24 per cent of the retail price plus £112.07 per thousand cigarettes
|
| Cigars |
£169.74 per kilogram |
| Hand-rolling tobacco |
£122.01 per kilogram |
| Other smoking tobacco and chewing tobacco |
£74.63 per kilogram |
The impact of the tobacco duty changes is shown in the table below. This does
not show the offsetting impact of the reduction in VAT, which will vary between
products of different price.
Product
|
Typical unit
|
Excise duty including VAT at 15% on duty
|
| Cigarettes (premium) |
Packet of 20 |
17p |
| Cigars |
Packet of 5 |
5p |
| Hand-rolling tobacco |
25g |
13p |
| Other smoking tobacco and chewing tobacco |
25g |
8p |
Alcohol duty rates
From 1 December 2008, duties on alcohol will be:
Product and basis of duty
|
Duty
|
Rate per litre of pure alcohol
|
| Spirits |
£23.05 |
| Spirits-based RTDs ready to drink |
£23.05 |
| Wine and made-wine: exceeding 22% abv. |
£23.05 |
Rate per hectolitre per cent of alcohol in the beer
|
| Beer |
£16.15 |
Rate per hectolitre of product
|
| Still cider and perry: exceeding 1.2% - not exceeding
7.5% abv. |
£31.21 |
| Still cider and perry: exceeding 7.5% - less than 8.5%
abv. |
£46.83 |
| Sparkling cider and perry: exceeding 1.2% - not
exceeding 5.5% abv. |
£31.21 |
| Sparkling cider and perry: exceeding 5.5% - less than
8.5% abv. |
£203.14 |
| Wine and made-wine: exceeding 1.2% - not exceeding 4%
abv. |
£64.65 |
| Wine and made-wine: exceeding 4% - not exceeding 5.5%
abv. |
£88.90 |
| Still wine and made-wine: exceeding 5.5% - not
exceeding 15% abv. |
£209.82 |
| Wine and made-wine: exceeding 15% - not exceeding 22%
abv. |
£279.74 |
| Sparkling wine and made-wine: exceeding 5.5% - less
than 8.5% abv. |
£203.14 |
| Sparkling wine and made-wine: 8.5% and above - not
exceeding 15% abv. |
£268.75 |
The impact of the alcohol duty changes is shown in the table below. This does
not show the offsetting impact of the reduction in VAT, which will vary between
products and depending on the point of sale.
Product
|
Typical unit
|
Excise duty including VAT @ 15% of the duty
|
| Beer @ 4.2% abv |
pint |
3p |
| Wine |
75cl bottle |
13p |
| Sparkling wine |
75cl bottle |
17p |
| Spirits @ 38.77% ave abv |
70cl bottle |
53p |
| Spirits-based RTDs ready to drink |
275ml bottle |
3p |
| Cider & perry |
litre |
3p |
Air Passenger Duty Rates
Air Passenger Duty rate changes will take effect from 1 November 2009 and
from 1 November 2010.
Band and distance of capital city of destination country in miles from
the UK
|
In the lowest class of travel (reduced rate)
|
In other than the lowest class of travel (standard rate)
|
| |
On and after 1 Nov 2009
|
On and after 1 Nov 2010
|
On and after 1 Nov 2009
|
On and after 1 Nov 2010
|
| Band A (0 - 2000) |
£11 |
£12 |
£22 |
£24 |
| Band B (2001 – 4000) |
£45 |
£60 |
£90 |
£120 |
| Band C (4001 – 6000) |
£50 |
£75 |
£100 |
£150 |
| Band D (over 6000) |
£55 |
£85 |
£110 |
£170 |
Fuel duties
Fuel duty rate changes will take effect from 1 December 2008 and 1 April
2009.
Fuel Type
|
Duty rate (pence per litre, unless stated)
|
Current Rate
|
On and after 1 Dec 2008
|
On and after 1 April 2009
|
| Ultra-low sulphur petrol/diesel |
50.35 |
52.35 |
54.19 |
| Sulphur-free petrol/diesel |
50.35 |
52.35 |
54.19 |
| Biodiesel |
30.35 |
32.35 |
34.19 |
| Bioethanol |
30.35 |
32.35 |
34.19 |
| Liquefied petroleum gas used as road fuel |
16.49p per kg |
20.77p per kg |
24.82p per kg |
| Natural gas used as road fuel |
13.70p per kg |
16.60p per kg |
19.26p per kg |
| Rebated gas oil (red diesel) |
9.69 |
10.07 |
10.42 |
| Fuel Oil |
9.29 |
9.66 |
10.00 |
Vehicle excise duty
Cars registered on or after 1 March 2001
Vehicle Excise Duty for Cars registered on or after 1 March 2001: current
rates (2008-09)
VED band
|
CO2 emissions (g/km
|
2008-09*
|
| A |
Up to 100 |
£0 |
| B |
101-120 |
£35 |
| C |
121-150 |
£120 |
| D |
151-165 |
£145 |
| E |
166-185 |
£170 |
| F** |
Over 185 |
£210 |
| G |
Over 225 |
£400 |
*Alternative fuel discount: A-E £20, F-G £15
** Includes cars emitting over 225g/km registered between 1 March 2001 and 23
March 2006
Vehicle Excise Duty for Cars registered on or after 1 March 2001: 2009-10
and 2010-11 standard rates
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 |
*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
Vehicle Excise Duty for brand new Cars: 2010-11 first-year rates
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 |
Cars and light goods vehicles registered before 1 March 2001
Vehicle Excise Duty for Private and Light Goods Vehicles registered before 1
March 2001: 2009-10 and 2010-11 rates
VED band
|
Change
|
2009-10 rate
|
2010-11 rate
|
| Up to 1549cc |
+£5 |
£125 |
£125 |
| Over 1549cc |
+£5 |
£190 |
£205 |
Light goods vehicles registered on or after 1 March 2001
Vehicle Excise Duty for Light Goods Vehicles registered on or after 1 March
2001: 2009-10 and 2010-11 rates
VED band
|
Change
|
2009-10 rate
|
2010-11 rate
|
| Euro 4* & 5** discount rate |
+£5 |
£125 |
£125 |
| Standard rate |
+£5 |
£185 |
£200 |
*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
Motorbikes and Heavy Goods Vehicles
Vehicle Excise Duty for Motorcycles: 2009-10 rates
VED band
|
Change
|
2009-10 rate
|
| Up to 150cc |
- |
£15 |
| 151-400cc |
- |
£33 |
| 401-600cc |
- |
£48 |
| Over 600cc |
- |
£66 |
Vehicle Excise Duty for Heavy Goods Vehicles and related vehicles: 2009-10
rates
VED band
|
Change
|
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 |
Details
Further details of changes in 2009-10 (and, where indicated, later years) are
set out below:
Value Added Tax (VAT)
There will be a temporary reduction in the standard rate of VAT to 15% from 1
December 2008 until 31 December 2009 as part of a fiscal stimulus.
Income tax rates and allowances
The main rates of income tax for 2009/10 will remain at 20% for basic rate
taxpayers and 40% for higher-rate taxpayers.
The age related allowance has been raised in line with inflation to £9,490
for people aged between 65 and 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 £182 a week.
The personal allowance for people aged under 65 will increase by £130 above
indexation on top of the £600 increase this May to £6,475.
The annual (AA) and lifetime allowances (LTA) for pensions tax relief were
set in the Finance Act 2004 for the period 2006/07 until 2010/11. The LTA will
rise to £1.75m in 2009/10 and then to £1.8m in 2010/11; the AA will at the same
time be increased to £245,000 and then £255,000. Thereafter, both the LTA and AA
will remain constant at their 2010/11 rates for a period of five years, up to
and including 2015/16.
National insurance contributions
The starting point for employers’, employees’ and self-employed NICs in
2009-10 will increase in line with inflation to £110 per week. NICs are not paid
on earnings or profits below this amount. The upper earnings and profits limits
for NICs will increase from £770 to £844 per week. For the self-employed, the
rate of Class 2 contributions will increase to £2.40 per week.
The weekly rate of voluntary Class 3 contributions for the 2009/10 tax year
will be £12.05 per week. This rate supports an amendment to the Pensions Bill,
tabled by DWP Ministers on 29 October 2008, that relaxes the time limits for the
payment of voluntary NICs by individuals approaching state pension age. The
amendment allows individuals with 20 qualifying years on their record (which may
include any complete year of Home Responsibilities Protection who reach State
Pension age between 6 April 2008 and 5 April 2015 to pay an additional six years
of voluntary Class 3 contributions for any missing years since 1975/76. As
announced during the Bill debate, this rate is designed to make the amendment
cost neutral overall. The number of qualifying years required to receive a full
State Pension falls from 44 for a man and 39 for a woman to 30 for both men and
women from 6 April 2010. This significantly increases the value of voluntary
Class 3 contributions to those who buy them. The actuarial value of Class 3
contributions is around £45 per week.
Employers’ and employees’ contributions
In line with the Social Security Contributions and Benefits Act 1992, the
lower earnings limit for employees’ Class 1 contributions is to be raised to £95
a week. It is set at the level of the basic state pension for a single person
from April 2009, rounded down to the nearest pound. This is the lowest level of
weekly earnings that can count towards entitlement to contributory benefits.
The primary and secondary thresholds for Class 1 contributions will increase
in line with inflation to £110 a week. Employees and employers will pay no
Class 1 contributions on earnings below this level.
The upper earnings limit for employees’ Class 1 contributions will be raised
to £844 a week, aligning it with the weekly equivalent of the higher rate
threshold, the level at which higher rate tax starts to be paid.
The standard main rate of employees’ Class 1 contributions below the upper
earnings limit will continue to be 11 per cent, and above the limit the rate
will continue to be 1 per cent.
The standard rate of employers’ Class 1 contributions will continue to be
12.8 per cent.
The self-employed
The flat rate of Class 2 contributions will increase to £2.40 a week. Those
with earnings below the annual small earnings exception can apply to be exempted
from paying Class 2 contributions; this limit will be raised to £5,075.
The annual lower profits limit for Class 4 contributions will increase in
line with inflation to £5,715.
The upper profits limit for Class 4 contributions will be raised to £43,875,
to align it with the level at which higher rate tax begins to be paid.
The self-employed will pay Class 4 contributions on all their profits above
the lower profits limit. The rate of Class 4 contributions will continue to be 8
per cent on profits below the upper profits limit, and 1 per cent on profits
above that limit.
Child and Working Tax Credits rates and Child Benefit
Child Benefit is increasing to £20 for the first child, and in line with
inflation for subsequent children. These changes will be brought forward from
April 2009 to 5 January 2009.
All elements of the Working Tax Credit, apart from the childcare element, are
increasing 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%.
The child element of the Child Tax Credit is increasing by £75 above average
earnings indexation. This includes the Government’s commitment to increase the
child element by £50 above indexation in April 2009, and also brings 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 are increasing in line with inflation from April 2009. The
family element and baby addition remain unchanged.
The income threshold for receiving maximum CTC only is increasing 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.
Air Passenger Duty
Air passenger duty will be reformed from a two-band system, to a four-band
system from 1 November 2009. The four distance bands will be set at 2,000 mile
intervals from London, and destinations will be categorised based on the
distance from London to the capital city of the destination country/territory. A
list of countries/territories by bands can be found on the HM Revenue and
Customs (HMRC) website: www.hmrc.gov.uk.
Each band will have two rates, one for the standard class of travel and one
for other classes of travel. Changes will have effect in relation to any
carriage of a passenger that begins on or after 1 November 2009, irrespective of
when the ticket for travel was booked or purchased. The scope of APD remains the
same, and all existing exemptions will continue to apply, details can be found
on the HMRC website.
Fuel duty
This PBR announces that the main fuel duty rates will increase by 2 pence per
litre on 1 December 2008.
Duty rates for rebated oils will also rise in proportion to main road fuel
duties on this date. The duty differential for compressed natural gas will be
maintained and the differential for liquefied petroleum gas will decrease by 1
pence per litre.
Vehicle excise duty (VED)
Changes to this year’s VED rates will take effect from 1 April 2009.
On 1 April 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.
Lottery Taxation
Following in depth analysis of the impact of switching lottery duty to a
gross profits tax, the Government announces that it will retain the stakes based
system of lottery taxation because of uncertainty over the likely impact of a
change at this time.
Notes
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.
About the Author
© Crown Copyright. Material taken from HM-Treasury.
Reproduced under the terms and conditions of the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2008-11-25 01:25:10 in Tax Articles
