Finance Bill Tracking Service 2009 | Budget 2009

Budget 2009 - Value Added Tax, Income Tax Allowances, National Insurance Contributions, Child And Working Tax Credit Rates 2009-10 And Other Rates

2009-10 rates and allowances for VAT, Income tax, Capital Gains tax, Inheritance tax, Corporation tax on profits, National Insurance Contributions, the Working and Child Tax Credit, Guardian's Allowance, stamp taxes and duties, transfers of shares and stocks, tobacco and alcohol duties, gambling tax, fuel duties, vehicle excise duties and tax relief for business expenditure on cars are set out below.

Value Added Tax (VAT)

Current rate On and after 1 Jan 2010
Standard rate 15% 17.5%

A reduced rate of VAT of 5% will apply to children's car seat bases from 1 July 2009 (in line with the rate that already applies to children's car seats).

The registration threshold for VAT will rise to £68,000 from 1 May 2009.

Income tax, capital gains tax and inheritance tax

£ per year (unless stated) 2008-09 Change 2009-10
Income tax personal and age-related allowances*
Personal allowance (age under 65) £6,035 +£440 £6,475
Personal allowance (age 65-74) £9,030 +£460 £9,490
Personal allowance (age 75 and over) £9,180 +£460 £9,640
Married couple's allowance** (age 75 £6,625 +£340 £6,965
and over)
Married couple's allowance** - minimum £2,540 +£130
amount £2,670
Income limit for age-related allowances £21,800 +£1100 £22,900
Blind person's allowance £1,800 +£90 £1,890
Capital gains tax annual exempt amount
Individuals etc. £9,600 +£500 £10,100
Most trustees £4,800 +£250 £5,050
Individual inheritance tax allowance £312,000 +£13,000 £325,000
Pension schemes allowances
Annual Allowance £235,000 +£10,000 £245,000
Lifetime Allowance £1,650,000 +£100,000 £1,750,000

*As announced at the 2008 Pre-Budget Report

**Married couple's allowance is given at the rate of 10 per cent

Income tax: taxable bands*

2008-09 £ per year 2009-10 £ per year
Starting savings rate 0-£2,320 Starting savings 0-£2,440
10%** rate 10%**
Basic rate: 20% 0-£34,800 Basic rate: 20% 0-£37,400

Higher rate: 40% Over £34,800 Higher rate: 40% Over £37,400

*As announced at the 2008 Pre-Budget Report ** There is a 10p starting rate for savings income only. If an individual's non savings taxable income exceeds the starting rate limit, the 10p starting rate f or savings will not be available for savings income

Corporation tax on profits

£ per year (unless 2008-09 2009-10
stated)
£0 - £300,000 21 % 21 %*
£300,001 - £1,500,000 Marginal Relief Marginal Relief
£1,500,001 or more 28 % 28 %

* The 2008 Pre-Budget Report announced that a rise in the small companies' rate to 22% would be deferred until 2010-11.

National insurance contributions*

£ per week (unless stated) 2008-09 Change 2009-10
Lower earnings limit, primary Class 1 £90 +£5 £95
Upper earnings limit, primary Class 1 £770 +£74 £844
Upper Accruals Point N/A N/A £770
Primary threshold £105 +£5 £110
Secondary threshold £105 +£5 £110
Employees' primary Class 1 rate between 11% - 11%
primary threshold and upper earnings limit
Employees' primary Class 1 rate above 1% - 1%
upper earnings limit
Employees' contracted-out rebate - 1.6% - 1.6%
salaryrelated schemes
Employees' contracted-out rebate - 1.6% - 1.6%
moneypurchase schemes
Married women's reduced rate between 4.85% - 4.85%
primary threshold and upper earnings limit
Married women's rate above upper earnings 1% - 1%
limit
Employers' secondary Class 1 rate 12.8% - 12.8%
above secondary threshold
Employers' contracted-out rebate, 3.7% - 3.7%
salaryrelated schemes
Employers' contracted-out rebate, 1.4% - 1.4%
moneypurchase schemes
Class 2 rate £2.30 +£0.10 £2.40
Class 2 small earnings exception (per year) £4,825 +£250 £5,075
Special Class 2 rate for share fishermen £2.95 +£0.10 £3.05
Special Class 2 rate for volunteer development workers £4.50 +£0.25 £4.75
Class 3 rate (per week) £8.10 +£3.95 £12.05
Class 4 lower profits limit (per year) £5,435 +£280 £5,715
Class 4 upper profits limit (per year) £40,040 +£3,835 £43,875
Class 4 rate between lower profits limit and 8% -
upper profits limit 8%
Class 4 rate above upper profits limit 1% - 1%

* As announced at the 2008 Pre-Budget Report

Working and Child Tax Credits rates*

£ per year (unless stated) 2008-09 Change 2009-10
Working Tax Credit
Basic element £1,800 +£90 £1,890
Couple and lone parent element £1,770 +£90 £1,860
30 hour element £735 +£40 £775
Disabled worker element £2,405 +£125 £2,530
Severe disability element £1,020 +£55 £1,075
50+ Return to work payment (16-29 hours) £1,235 +£65 £1,300
50+ Return to work payment (30+ hours) £1,840 +£95 £1,935
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 £300 per - £300 per
children week week
Percentage of eligible costs covered 80% - 80%
Child Tax Credit
Family element £545 - £545
Family element, baby addition £545 - £545
Child element £2,085 +£150 £2,235
Disabled child element £2,540 +£130 £2,670
Severely disabled child element £1,020 +£55 £1,075
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 £15,575 £16,040
Credit only +£465
Income disregard £25,000 - £25,000

*As announced at the 2008 Pre-Budget Report

Guardian's Allowance rates from 6 April*

£ per week April 2008 Change April 2009
Guardian's Allowance £13.45 +0.65 £14.10

* As announced at the 2008 Pre-Budget Report

Stamp taxes and duties

Transfers of land and buildings (consideration paid)

The stamp duty land tax (SDLT) holiday, which exempts residential properties up to the value of £175,000 from SDLT, is extended until 31 December 2009.

From 1 January 2010, the zero and 1% rates apply as per the table below:

Rate Residential in disadvantaged areas Residential outside disadvantaged areas Non-residential
Total value of consideration
Zero £0 - £150,000 £0 - £125,000 £0 - £150,000
1% Over £150,000 Over £125,000 Over £150,000
- £250,000 - £250,000 - £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

Transfers of shares and stocks

The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent for 2009-10.

Tobacco duty rates

On 22 April 2009, tobacco duty rates will be:

Product Current Duty Duty on 22 April 2009
24 per cent of the retail 24 per cent of the retail price
Cigarettes price plus £112.07 per plus £114.31 per thousand
thousand cigarettes cigarettes
Cigars £169.74 £173.13
(per kilogram)
Hand-rolling tobacco £122.01 £124.45
(per kilogram)
Other smoking
tobacco and £74.63 £76.12
chewing tobacco
(per kilogram)

The impact of the tobacco duty changes is shown in the table below

Product Typical unit Excise duty including VAT at 15% on duty
Cigarettes (premium) Packet of 20 7 pence
Cigars Packet of 5 3 pence
Hand-rolling tobacco 25g 7 pence
Other smoking tobacco 25g 4 pence
and chewing tobacco

Alcohol duty rates

On 23 April 2009, duties on alcohol will be:

Current On 23 April 2009
Rate per litre of pure alcohol
Spirits £22.20 £22.64
Spirits-based ready to drink £22.20 £22.64
Wine and made-wine: Exceeding £23.05 £22.64
22% abv
Rate per hectolitre per cent of alcohol in the beer
Beer £16.15 £16.47
Rate per hectolitre of product
Still cider and perry: Exceeding 1.2% £31.21 £31.83
- not exceeding 7.5% abv.
Still cider and perry: Exceeding 7.5% £46.83 £47.77
- less than 8.5% abv.
Sparkling cider and perry: Exceeding £31.21 £31.83
1.2% - not exceeding 5.5% abv.
Sparkling cider and perry: Exceeding £203.14 £207.20
5.5% - less than 8.5% abv.
Wine and made-wine: Exceeding £64.65 £65.94
1.2% - not exceeding 4% abv.
Wine and made-wine: Exceeding 4% £88.90 £90.68
- not exceeding 5.5% abv.
Still wine and made-wine: Exceeding £209.82 £214.02
5.5% - not exceeding 15% abv.
Wine and made-wine: Exceeding £279.74 £285.33
15% - not exceeding 22% abv.
Sparkling wine and made-wine: £203.14 £207.20
Exceeding 5.5% - less than 8.5%
abv.
Sparkling wine and made-wine: £268.75 £274.13
8.5% and above - not exceeding
15% abv.

The impact of the alcohol duty changes is shown in the table below

Product Typical unit Excise duty including VAT at
15% of the duty
Beer @ 4.2% abv pint 1p
Wine 75cl bottle 4p
Sparkling wine 75cl bottle 5p
Spirits @ 37.5% abv 70cl bottle 13p
Spirits-based ready to
drink 275ml bottle 1p
Cider & perry litre 1p

Gambling tax

From 4pm on 22 April 2009, rates of all categories of amusement machine licence duty (AMLD) will increase.

AMLD (£)
after
increase -
months for
which
licence
granted
1 500 255 200 200 180 80
2 985 490 385 385 350 145
3 1475 735 585 585 530 220
4 1965 985 775 775 705 290
5 2465 1230 970 970 875 365
6 2955 1475 1160 1160 1050 435
7 3445 1720 1355 1355 1225 505
8 3935 1965 1550 1550 1405 580
9 4430 2215 1745 1745 1580 655
10 4920 2465 1935 1935 1755 725
11 5410 2710 2130 2130 1930 795
12 5625 2815 2215 2215 2010 830

For accounting periods starting on or after 1 April 2009 gaming duty bands will be revalorised to the following:

Marginal Tax 15% of 20% of next 30% of next 40% of next*
Rate first
Current Bands £1,911,000 £1,317,000 £2,307,000 £4,869,500
Revalorised Bands £1,929,000 £1,329,500 £2,329,000 £4,915,500

*50% will be charged on the remainder of Gross Gaming Yield

On 27 April 2009 participation fees for bingo and player-to-player gaming in casinos will no longer be subject to VAT.

For accounting periods starting on or after 27 April 2009 bingo duty will increase to 22%.

On 27 April 2009 player-to-player gaming in casinos will be brought into the gaming duty regime.

The Government will consult on moving the taxation of gaming machines onto a gross profits tax basis.

Fuel duties

Pence per litre Duty rate From 1 April 2009* From 1 September
(unless stated) pre-1 April 2009
2009 Change New duty Change New
rate duty rate
Ultra-low sulphur 52.35p 56.19p
petrol/diesel +1.84p 54.19p +2p
Sulphur-free 52.35p 56.19p
petrol/diesel +1.84p 54.19p +2p
Biodiesel 32.35p +1.84p 34.19p +2p 36.19p
Bioethanol 32.35p +1.84p 34.19p +2p 36.19p
Liquefied petroleum gas used as road 20.77p per +4.05p per 24.82p per +2.85p per 27.67p
kg per kg
fuel kg kg kg
Natural gas used 16.60p +2.66p per 19.26 p per +2.9p per 22.16p
as road fuel per kg kg kg kg per kg
Rebated gas oil 10.07p + 0.38p 10.80p
(red diesel) +0.35p 10.42p +
Fuel Oil 9.66p +0.34p 10.00p +0.37p 10.37p

*As pre-announced at Budget 2007 and confirmed at the 2008 Pre- Budget Report

Vehicle excise duty

Vehicle Excise Duty for Cars registered on or after 1 March 2001: 2009-10 and 2010-11 standard rates*

CO2 Change from Standard rate Standard rate
VED band emissions 2008-09 to 2010-11**
(g/km) 2009-10 2009-10**
A Up to 100 £0 £0 £0
B 101-110 £0 £35 £20
C 111-120 £0 £35 £30
D 121-130 £0 £120 £90
E 131-140 £0 £120 £110
F 141-150 +£5 £125 £125
G 151-165 +£5 £150 £155
H 166-175 +£5 £175 £180
I 176-185 +£5 £175 £200
J 186-200 +£5 £215 £235
K*** 201-225 +£5 £215 £245
L 226-255 +£5 £405 £425
M Over 255 +£5 £405 £435

* As announced at the 2008 Pre-Budget Report

**Alternative fuel discount: 2009-10, A-I £20, J-M £ 15; 2010-11 onwards, £10 all cars

***Includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006

Vehicle Excise Duty for brand new Cars: 2010-11 first-year rates*

VED CO2 emissions First-year rate 2010-
band (g/km) 11**
A Up to 100 £0
B 101-110 £0
C 111-120 £0
D 121-130 £0
E 131-140 £110
F 141-150 £125
G 151-165 £155
H 166-175 £250
I 176-185 £300
J 186-200 £425
K 201-225 £550
L 226-255 £750
M Over 255 £950

* As announced at the 2008 Pre-Budget Report

**Alternative fuel discount: 2010-11 onwards, £10 all cars

Vehicle Excise Duty for Cars and Light Goods Vehicles registered before 1 March 2001: 2009-10 and 2010-11 rates*

VED band 2008-09 to rate rate
Change from 2009-10 2010-11
2009-10
Up to 1549cc +£5 £125 £125
Over 1549cc +£5 £190 £205

* As announced at the 2008 Pre-Budget Report

Vehicle Excise Duty for Light Goods Vehicles registered on or after 1 March 2001: 2009-10 and 2010-11 rates*

VED band 2008-09 to rate
Change from 2009-10 2010-11
2009-10 rate
Euro 4** & 5*** +£5 £125 £125
discount rate
Standard rate +£5 £185 £200

*As announced at the 2008 Pre-Budget Report **for Euro 4 compliant vans registered between 1 March 2003 and 31 December 2006 ***for Euro 5 compliant vans registered between 1 January 2009 and 31 December 2010

Vehicle Excise Duty for Motorcycles: 2009-10 rates*

Change from 2009-10
VED band 2008-09 to rate
2009-10
Up to 150cc - £15
151-400cc - £33
401-600cc - £48

Over 600cc - £66

*As announced at the 2008 Pre-Budget Report

Vehicle Excise Duty for Heavy Goods Vehicles and related vehicles: 2009-10 rates*

VED Change from Standard rate Reduced Pollution
band 2008-09 to 2009-10 Certificate Rate
2009-10 2009-10
A - £165 £160
B - £200 £160
C - £450 £210
D - £650 £280
E - £1,200 £700
F - £1,500 £1,000
G - £1,850 £1,350

* As announced at the 2008 Pre-Budget Report

DETAILS

Further details of changes in 2009-10 (and, where indicated, later years) are set out below:

Income tax

As announced at the 2008 Pre-Budget Report the personal allowance for under 65s will increase above indexation to £6,475.

Age related allowances have been increased in line with inflation to £9, 490 for people aged between 65-74 and to £9,640 for those aged 75 and over. This will mean that in 2009-10 no one aged 65 or over need pay tax on an income of up to £183 a week.

The basic rate of tax will remain at 20p, and the higher rate of tax will remain at 40p.

National insurance contributions

As announced at the 2008 Pre-Budget Report the starting point for employers', employees' and self employed National Insurance Contributions (NICs) will increase in line with inflation to £110. The upper earnings and profits limits for Class 1 and Class 4 NICs respectively will increase from 2009 from £770 to £844 per week. For the self-employed, the rate of Class 2 contributions will increase to £2.40 a week.

Capital Gains Tax

The capital gains tax (CGT) annual exempt amount increased in line with statutory indexation to £10,100 for the tax year 2009-10 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees is increased to £5,050.

Every husband, wife, civil partner and child has his or her own £10,100 annual exempt amount.

For capital gains above the annual exempt amount the CGT rate for 2009-10 will continue to be 18 per cent.

Non-payable dividend tax credit

There is currently a one ninth non-payable dividend tax credit available for UK individuals receiving dividends from UK resident companies or from shareholdings of less than 10 per cent in foreign companies. For these individuals, higher rate taxpayers are liable to tax at 32.5 per cent but in practice only pay 25 per cent (of the net dividend) because part of the tax liability is covered by the tax credit. Basic rate taxpayers are liable to tax at 10 per cent but in practice do not pay any tax on dividends from UK companies because the tax liability is entirely covered by the tax credit.

As announced at Budget 2008, the non-payable dividend tax credit will be extended from 22 April 2009 to investors with a shareholding of 10 per cent or more in a non-UK resident company, unless the source country does not levy a tax on corporate profits similar to corporation tax. The credit will also be extended to all dividends from offshore funds, except for distributions from offshore funds with more than 60 per cent of interest bearing assets, which will be taxed as interest.

Inheritance Tax

As announced in Budget 2006, the inheritance tax allowance increased in 2009-10 to £325,000 for individuals or £650,000 for married couples and civil partners. The value of estates over and above the allowance is taxed at 40 per cent. The proportion of estates left on death in 2009-10 which are expected to be liable for inheritance tax is 2 per cent.

Child Benefit

At Budget 2008, it was announced that in April 2009 the Child Benefit eldest/only child rate would increase above inflation to £20.00, and the rate for other children would increase in line with inflation to £13.20. At the 2008 Pre-Budget Report, these rises were brought forward from April 2009 to January 2009.

Child and Working Tax Credits rates

As announced at the 2008 Pre-Budget Report, on 6 April 2009 all elements of the Working Tax Credit (WTC), apart from the childcare element, increased in line with inflation. The limits on eligible childcare costs in the childcare element remain at £175 for one child and £300 for two or more children. The proportion of childcare costs payable through the childcare element of WTC remains at 80%.

As announced at the 2008 Pre-Budget Report, the child element of the Child Tax Credit (CTC) increased by £75 above average earnings indexation. This included the Government's commitment to increase the child element by £50 above indexation in April 2009, and also brought forward the Government's commitment to increase the child element by £25 above indexation in April 2010 to April 2009. The elements for disabled children and severely disabled children increased in line with inflation. The family element and baby addition remain unchanged.

As announced at the 2008 Pre-Budget Report, the income threshold for receiving maximum CTC only increased to £16,040, equivalent to the effective threshold for lone parents and couples receiving both WTC and CTC. The threshold for receiving maximum WTC remains at £6,040, and the threshold for receiving maximum family element of CTC remains at £50,000. The withdrawal rate for the family element remains at 6.67%, and for the rest of tax credits at 39%. The disregard for changes in income during the tax year remains at £25,000.

Stamp duty land tax (SDLT)

On the 2 September 2008 a SDLT holiday was announced, increasing the starting rate of SDLT for residential property to £175,000. This was due to expire on 3 September 2009. Budget 2009 announces that this will be extended until 31 December 2009.

Vehicle excise duty (VED)

Changes to this year's VED rates will take effect from 1 May 2009.

On 1 May 2009, new emissions based VED bandings will be introduced for all cars registered on or after 1 March 2001. Full rates are set out in the table above.

Both VED rates for cars and light goods vehicles registered before 1 March 2001 will increase by £5 in 2009. In 2010, the higher rate will increase by £15 and the lower rate will be frozen.

The standard VED rate for light goods vehicles registered on or after 1 March 2001 will increase by £5 in 2009. The discounted rate for eligible light goods diesel vehicles achieving early compliance with Euro 4 and 5 emissions standards will also be increased by £5. In 2010, the standard rate will be increased by £15 and the discounted rate will be frozen.

VED rates for motorbikes, Heavy Goods Vehicles (HGVs), Special Types Vehicles, Combined Transport vehicles and all related vehicles will be frozen in 2009.

Tax relief for business expenditure on cars

New rules for tax relief for business expenditure on cars were announced on 1 April. These take effect from 1 April 2009 for businesses in the charge to Corporation Tax and 6 April 2009 for businesses in the charge to Income Tax. The rate at which qualifying expenditure on cars can be written down against profits will depend on the car's CO2 emissions. Expenditure on cars with CO2 emissions exceeding 160 g/km will be allocated to the special rate capital allowances pool and attract 10% writing-down allowance (WDA). Expenditure on cars with CO2 emissions of 160g/km or less will attract 20% WDA in the main plant and machinery pool. The associated rules which disallow a proportion of car lease rental payments have also been amended in line with the new capital allowances rules.

NOTES FOR EDITORS

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.