Font Size

Pre-Budget Report Nov 2009 - Rates and Allowances in 2010-11

 By

HM Treasury - Expert Author

Tax Articles
Submit Articles   Back to Articles

Issued 09 December 2009

Announcements on rates and allowances in 2010-11

Press Notice 2 summarises 2009 Pre-Budget Report announcements on 2010-11 rates and allowances for Value Added Tax, Income Tax, Inheritance Tax, Corporation Tax, National Insurance Contributions, Child and Working Tax Credit rates, Child Benefit, Guardian’s Allowance, Stamp Duty Land Tax, Bingo duty, Landline Duty, VED and Fuel duty.

Value Added Tax (VAT)

Current rate On and after 1 January 2010

Standard rate

15% 17.5%

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 year 2010-11 £ per year

Starting savings rate: 10%*

£0-£2,440

Starting savings rate: 10%*

£0-£2,440

Basic rate: 20%

£0-£37,400

Basic rate: 20%

£0-£37,400

Higher rate: 40%

Over £37,400

Higher 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

 

£ per year (unless stated) 2009-10 Change 2010-11

Individual inheritance tax allowance

£325,000 - £325,000

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.

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

1.6% - 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

£2.40 - £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) April 2009 Change April 2010

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 week Jan 2009 Change April 2010

Eldest/Only Child

£20 30p £20.30

Other Children

£13.20 20p £13.40

Guardian's Allowance

£ per week April 2009 Change April 2010

Guardian's Allowance

£14.10 20p £14.30

Stamp taxes and duties

Transfers of land and buildings (consideration paid)

Rate Residential in disadvantaged areas Residential outside disadvantaged areas Non-residential
Total value of consideration
Zero £0 - £150,000

after 31 December 2009

(£0 - £175,000

until 31 December 2009)

£0 - £125,000

after 31 December 2009

(£0 - £175,000

until 31 December 2009)

£0 - £150,000
1%

Over £150,000 - £250,000

after 31 December 2009

(Over £175,000- £250,000 until 31 December 2009)

Over £125,000 - £250,000

after 31 December 2009

(Over £175,000- £250,000 until 31 December 2009)

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

Bingo duty

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

Landline Duty

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

Vehicle excise duty

Motorbikes

Vehicle Excise Duty for Motorcycles: 2010-11 rates

 

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

Details

Further details of 2009 Pre-Budget Report announced changes in 2010-11 are set out below:

VAT - Flat Rate Scheme

2009 Pre-Budget Report confirms the reversion of the VAT standard rate to 17.5 per cent from 1 January 2010.

2009 Pre-Budget Report also announces that sectoral rates for the VAT Flat Rate Scheme (FRS) are updated. Details of new sectoral rates are available on the HMRC website. The FRS provides optional simplified VAT arrangements for businesses with turnover up to £150,000.

Income tax rates and allowances

2009 Pre-Budget Report announces that the main rates of income tax for 2010-11 will remain at 20 per cent for basic rate taxpayers and 40 per cent for higher-rate taxpayers. As announced at Budget 2009 an additional rate of tax of 50 per cent will apply on income over £150,000.

As announced at the 2008 Pre-Budget Report, tax allowances and thresholds will be frozen in 2010-11 at a time when RPI is negative, with taxpayers receiving a real terms benefit from the maintenance of 2009-10 levels.

This means that the personal allowance for 2010-11 will remain at £6,475 and the age related allowance will remain at £9,490 for people aged between 65 and 74, and to £9,640 for those aged 75 and over. In 2010-11 no one aged 65 or over need pay tax on an income of up to £182 a week.

Inheritance Tax

2009 Pre-Budget Report announces that the inheritance tax allowance will be frozen at £325,000 for individuals and at £650,000 for married couples and civil partners in 2010-11.

National insurance contributions

2009 Pre-Budget Report announces that the starting point for employers', employees' and self employed National Insurance Contributions (NICs) will be maintained at £110 per week despite RPI being negative. The upper earnings and profits limits for Class 1 and Class 4 NICs respectively will also be maintained at their current level of £844 a week, and for the self-employed, the rate of Class 2 contributions will continue to be £2.40 a week. Class 3 contributions will also remain at their current rate of £12.05. In line with the increase in the amount of the state pension, the lower earnings limit and the special class 2 rate for volunteer development workers which are linked to this level will rise to £97 a week and £4.85 a week respectively.

Small companies’ rate of corporation tax

 The 2008 Pre-Budget Report announced that the planned rise in the small companies' rate to 22 per cent would be deferred until 2010-11. The 2009 Pre-Budget Report announces this rise will be deferred for a further year until 2011-12, so the rate will freeze at 21 per cent until April 2011.

Tax Credits and Child Benefit

As announced in Budget 2009, the child element of the Child Tax Credit will rise by £20 above indexation in April 2010, an increase of £65 in cash terms.

The Government will increase Child Benefit, Guardian’s Allowance, the disability elements of the Child Tax Credit, all elements of the Working Tax Credit (WTC), apart from the childcare element, and the disregard for WTC in Housing Benefit by 1.5 per cent in April 2010. The threshold for receipt of the maximum Child Tax Credit award will rise to £16,190, reflecting the income level at which a family in receipt of the basic and couple’s or lone parent’s element of WTC would have their entitlement to WTC tapered to zero. Other rates and thresholds in tax credits will remain unchanged.

Stamp Duty Land Tax (SDLT)

2009 Pre-Budget Report confirms the SDLT holiday for residential properties up to the value of £175,000 will end as planned on 31 December 2009.

Fuel duties

As originally announced at Budget 2008, the duty differential for biofuels will cease from 1 April 2010. The 2009 Pre-Budget Report announces that the duty differential will continue for two years for biofuels made from used cooking oils.

Vehicle excise duty (VED)

2009 Pre-Budget Report announces that VED rates for motorbikes in 2010-11 will increase by £4 in the highest band, and by £2 in the second highest band, from 1 April 2010. VED rates for motorbikes in the lower two bands will be frozen.

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.



Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2009-12-10 13:30:34 in Tax Articles

All Articles