On Wednesday 22 April 2009 the Chancellor of the Exchequer delivered his Budget Report to the House of Commons. Below are outline details of the main points raised:
- The intended 45% higher rate tax increase for those with taxable incomes in excess of £150,000 will be brought forward to apply from 6 April 2010 and the rate will be increased to 50%.
We intend to review all clients that may be affected with a view to contacting them with any measures which may mitigate the tax charge at the new rate, prior to the start of the next tax year
- The period against which company losses may be claimed against tax paid on previous profits is extended from the previous 12 months to the previous 3 years. Such extended practice will apply to November 2010.
- A car scrappage scheme will be introduced from May 2009 whereby a £2000 discount will be applied against the purchase of a car, when a car more than 10 years old is part-exchanged.
- From 6 April 2010, the basic personal tax allowance will be gradually reduced to nil for those individuals with adjusted net incomes above £100,000.
The allowance will be reduced £1 for every £2 above the limit
- The effective rate for higher rate tax on net dividends will apply at 36.11%, rather than the current 25% on income in excess of £150,000, to take into account the higher rate tax increase from 6 April 2010.
- From 22 April 2009, individuals will be entitled to a non-payable 10% tax credit on foreign dividends regardless of the shareholding percentage, subject to certain conditions.
- Those whose rental of property in the UK satisfies the furnished holiday lettings (FHL) rules can claim any losses against other income as if they were trading losses. This has been extended to other properties in the European Economic Area.
Those with properties in the EEA (which for example includes Cyprus and Bulgaria) which are let to the holiday market and who are likely to make losses should contact us to confirm the detailed rules to enjoy FHL loss treatment. This favourable loss treatment will be withdrawn for all properties with effect from 6 April 2010.
A RETROSPECTIVE TREATMENT WILL BE ALLOWED BACK TO THE YEAR ENDED 5 APRIL 2007 AND AFTER DECEMBER 2006 FOR COMPANIES, BUT THIS MUST BE CLAIMED BY 31 JULY 2009.
PLEASE CONTACT US URGENTLY IF YOU THINK YOU ARE AFFECTED
- The ISA limit will be raised to £10,200 (£5,100 for the cash element) for those aged 50 and over effective from 6 April 2009 and all investors from 6 April 2010
- From 6 April 2011, tax relief on pension contributions will be tapered away down to the basic rate of tax for those with income in excess of £150,000. Basic rate relief only will apply once the income reaches £180,000
Unfortunately, rules will be put in place from 22 April 2009 to restrict those involved making large pension contributions before April 2011. However contributions may be increased to £20,000 pa and still be allowable at the higher rate before 2011
- The H M Revenue & Customs Business Payment Support Service which is in place to assist spreading the payment of taxes for those businesses affected by the economic climate, will now accept reducing liabilities by anticipated losses in the current year
- A new 40% Capital Allowances First Year Allowance will apply from April 2009 for 1 year to increase tax relief on plant and equipment purchases
The above information is based on the Budget speech made by the Chancellor of the Exchequer on 22 April 2009 and press releases just made available on the HM Revenue & Customs website, although every effort has been made to ensure its accuracy, we would urge users to contact us before relying on any information given.
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