2009 Budget
A
Budget Summary
Against a backdrop of unprecedented economic gloom, Mr Darling presented his Budget speech on 22nd April 2009. To be frank this contained only a few surprises. The following is a summary of the main changes/proposals likely to be of significant day to day impact for the work of the tax practitioner. There were a significant number of other technical changes on the corporation tax front, mainly in the arena of anti-avoidance actions.
1.1 Personal Tax Changes
Personal
Allowances 2009-10
These remain as announced in the Pre-Budget report November 2008 and
are:
From the 6 April 2009 the income tax personal and age related
allowances are increased to:
Age under 65 - £6,475
Age 65 to 74 - £9,490
Age 75 and over - £9,640
The income limit for aged related allowances (over 65's) is
increased to £22,900.
Blind person's allowance increased to £1,890.
Personal Allowances 2010-11
The basic personal allowance will be reduced for taxpayers who earn
more than £100,000 per annum.
Where an individual's income is above £100,000 the basic personal
allowance will be reduced by £1 for every £2 their income exceeds
£100,000.
Income Tax
Rates 2009-10
Starting savings rate 10%* - £0 to £2,440
Basic rate 20% - £0 to £37,400
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.
New 50%
Income Tax Rates from 2010-11
From 6 April 2010 a new income tax rate of 50% will be applied to
taxable income in excess of £150,000.
1.2
Capital
Gains Tax 2009-10
The annual exempt amount for individuals is £10,100 (and for most
trustees £5,050)
1.3 Inheritance Tax 2009-10
The individual IHT
allowance is increased to £325,000.
1.3.1
Inheritance tax and capital gains tax
on farmland & woodlands
Agricultural land and woodlands in the UK are
currently subject to various
Inheritance Tax (IHT) reliefs and attract certain capital gains tax
benefits. The IHT reliefs are now to be extended to land located in
a state within the European Economic Area (EEA).
This territorial extension will also apply for the
purposes of capital gains tax (CGT) hold over relief.
The relief permits the deferral of CGT on the gift, or sale
at undervalue, of a relevant asset until its ultimate sale.
1.4
The Stamp duty land tax: exemption on
residential property
Introduced in September 2008, the 'holiday' from
stamp duty land tax (SDLT) has been extended until 31 December 2009.
Where the chargeable consideration for the residential
property is less than £175,000 it will be exempt from SDLT.
After 31 December 2009 the SDLT threshold for
residential property will revert to £125,000.
1.5 Pensioners Taxback Campaign
From autumn 2009 HM Revenue & Customs will be targeting pensioners
who receive the Pension Credit to help them reclaim tax they may
have paid in error from bank or building society interest they have
received.
1.6 ISA's
2009-10
The ISA limit is increased to £10,200 (up to £5,100 can be saved in
cash) restricted to people aged 50 or over.
2010-11
The limit is increased to the same level for all age groups.