Tax Rates 2009/2010

Income Tax rates

Band(£) Rate(%)
0 – 2,440 10*
2,441 – 37,400 20**
Over 37,400 40***

Capital Allowances

Plant and machinery – Annual Investment Allowance (AIA)

The AIA applies to expenditure incurred on or after 6 April 2008 (1 April 2008 for companies). The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long-life assets but not cars, of up to £50,000 p.a.

Any costs over the AIA fall into the normal capital allowance pools at either 10% or 20%. The £50,000 limit may need to be shared between certain businesses under common ownership.

Other plant and machinery allowances

The annual rate of allowance is 20% from 6 April 2008 (1 April 2008 for companies). A 10% rate applies to expenditure incurred on integral features and on long life assets on or after 6 April 2008 (1 April 2008 for companies). Long life asset expenditure brought forward will obtain the 10% rate.

A temporary 40% first year allowance may be due for certain expenditure exceeding the AIA incurred in the 12 month period beginning on 6 April 2009 (1 April 2009 for companies). A 100% first year allowance may still be available on certain energy efficient plant and cars.

Cars

For expenditure incurred on cars on or after 6 April 2009 (1 April 2009 for companies), costs will generally be allocated to one of the two plant and machinery pools. Cars with CO2 emissions not exceeeding 160 gm/km will receive a 20% allowance p.a. Cars with CO2 emissions over 160 gm/km will receive a 10% allowance p.a.

Industrial and agricultural buildings and hotels

The annual rate of allowance is 2% (3%) 6 April 2009 (1 April 2009 for companies). Special rules apply for accounting periods straddling these dates.

Income Tax Reliefs

2009/10 (£)
Personal allowance under 65 6,475
65 – 74* 9,490
75 and over* 9,640
Married couple’s allowance (relief at 10%) aged less than 75 and born before 6.4.35* n/a
75 and over 6,965
min. amount 2,670
Age allowance income limit
(Reduce age allowance by £1 for every £2 of excess income over £22,900.)		 22,900
Blind person’s allowance 1,890

Value Added Tax

Standard rate 17.5%*
Reduced rate 5%
Annual Registration Limit – from 1.5.09 (1.4.08 – 30.4.09 £67,000) £68,000
Annual Deregistration Limit – from 1.5.09 (1.4.08 – 30.4.09 £65,000) £66,000

* 15% from 1 December 2008 to 31 December 2009

Tax Credits

2009/10

Working Tax Credit

Basic element – max.

 1,890
Childcare element
80% of eligible costs up to £175 per week (£300 if two or more children).

Child Tax Credit (CTC)
Child element per child – max. 2,235
Family element 545
Baby addition 545

Reductions in maximum rates

39% of income above £6,420* p.a.

*If only CTC is claimed, the threshold is £16,040 (£15,575) p.a. The family element of CTC is not reduced unless income is more than £50,000 p.a. when it is reduced by £1 for every £15 of additional income.

Capital Gains Tax

2009/10
Individuals £
Exemption 10,100
Balance of gains 18%
Trusts
Exemption 5,050
Balance of gains (reduced by taper relief* for 2007/08). 18%
Entrepreneurs’ Relief

For gains arising on or after 6 April 2008, the first £1m of qualifying gains are charged at an effective rate of 10%. Gains in excess of £1m are charged at 18%

Pension Premiums

2009/10

  • Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings.
  • Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’. Tax relief for large contributions may be spread over several years.
  • Any contributions in excess of £245,000 (£235,000), whether personal or by the employer, will be subject to income tax on the individual at 40%.
  • No carry back of pensions contributions.

Inheritance Tax

Death rate (%) Lifetime rate (%) Chargeable transfers 2009/10 (£’000)
Nil Nil 0 – 325*
40 20 Over 325*

*Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007.

Reliefs

Annual exemption £3,000 Marriage – parent £5,000
Small gifts £250 – grandparent £2,500
– bride/groom £2,500
– other £1,000

Reduced charge on gifts within seven years of death

Years before death 0-3 3-4 4-5 5-6 6-7
% of death charge 100 80 60 40 20

Car and Fuel Benefits

Company cars 2010/11

CO2emissions (gm/km) (round down to nearest 5gm/km) % of car’s list price taxed
up to 135 15
140 16
145 17
150 18
155 19
160 20
165 21
170 22
175 23
180 24
185 25
190 26
195 27
200 28
205 29
210 30
215 31
220 32
225 33
230 34
235 and above 35

Company cars

  • For diesel cars add a 3% supplement but maximum still 35%. Euro IV diesel cars registered before 1 January 2006 do not suffer the 3% supplement.
  • Discounts apply to certain environmentally friendly cars.
  • A 10% rate applies to non-electric cars with emissions of no more than 120gm/km. Environmentally friendly discounts do not apply to these cars but the diesel supplement does.
  • For cars registered before 1 January 1998 the charge is based on engine size.
  • The list price includes accessories and is subject to an upper limit of £80,000.
  • The list price is reduced for capital contributions made by the employee up to £5,000.

Car fuel benefit 2009/10

£16,900 x ‘appropriate percentage’ – Percentage used to calculate the taxable benefit of the car for which the fuel is provided.

  • The appropriate percentage is the percentage used to calculate the taxabale benefit of the car for which the fuel is provided. No change to this calculation was announced on Budget Day.
  • The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.

Van benefit per vehicle 2009/10

  • Van benefit £3,000
  • Fuel benefit £500
  • The charges will not apply if a ‘restricted private use condition’ is met throughout the year.

Main Social Security Benefits

Weekly benefit 2009/10
Basic retirement pension – single person £95.25
– married couple £152.30
Statutory pay rates -average weekly earnings £97 (£95) or over
Statutory Sick Pay £79.15
Statutory Maternity Pay – First six weeks 90% of weekly earnings
– Next 33 weeks £123.06*
Statutory Paternity Pay – two weeks £123.06*
Statutory Adoption Pay – 39 weeks £123.06*

* Or 90% of weekly earnings if lower.

Mileage Allowance Payments

Cars and vans 2009/10
Rate per mile
Up to 10,000 miles 40p
Over 10,000 miles 25p
Bicycles 20p
Motorcycles 24p

These rates represent the maximum tax free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

National Insurance

Class 1 (employed) contracted in

2009/10 Rates
Weekly earnings Employer Employee
Up to £110 Nil* Nil*
£110.01 – £844 12.8%** 11%**
Over £844 12.8%** £80.74 +1%***

* Entitlement to contribution-based benefits retained for earnings between £97.01 and £110 per week.
** On earnings above £110.
*** On earnings above £844.

Class 1A (employers)

 12.8% on employee taxable benefits

Class 1B (employers)

 12.8% on PAYE Settlement Agreements

Class 2 (self-employed)

 flat rate per week £2.40 – small earnings exception p.a. £5,075 p.a.

Class 3 (voluntary)

 flat rate per week £12.05

Class 4 (self-employed)

 8% on profits between £5,715 and £43,875 plus 1% on profits over £43,875

Individual Savings Accounts (ISAs)

2009/10 £
Overall investment limit 7,200 (10,200*)
Comprising – cash up to 3,600 (5,100*) max.
– balance in stocks and shares 7,200 (10,200*) max.

* From 6 October 2009 for those aged 50 and over.

Corporation Tax

Profits band (£) Rate (%)
Small companies rate 0 – 300,000 21*
Marginal (small companies) rate 300,001 – 1,500,000 29.75*
Full rate Over 1,500,000 28*
Small companies fraction 7/400*

The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.

*Different rates apply for ring-fenced (broadly oil industry) profit

Self-Assessment – Key Dates 2009/10

31 July 2009

Second payment on account for 2009/10.

5 October 2009

Deadline for notifying HMRC of new sources of income if no tax return has been issued for 2009/10.

31 October 2009

Deadline for submission of 2009/10 non-electronic returns. Also, the deadline for submission of 2009/10 returns requiring HMRC calculation and where the taxpayer wants a balancing payment (below £2,000) collected through their 2011/12 PAYE code.

31 January 2010

Deadline for filing electronic tax returns for 2009/10.

Balancing payment due for 2009/10. First payment on account due for 2010/11.