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Pre-Budget Report Nov 2009 - Rates and Allowances in 2010-11
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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.
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Article Published/Sorted/Amended on Scopulus 2009-12-10 13:30:34 in Tax Articles
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