The Chancellor's key aim for Budget 2009 is stated as
This notice sets out new rates and allowances for the year commencing 6 April 2009.
With regard to income tax:
With regard to CGT:
With regard to IHT, the nil rate threshold will rise by more than statutory indexation to £325,000 in 2009–10 (£650,000 for married couples and civil partners) and £350,000 in 2010-11 (£700,000 for married couples and civil partners).
With regard to NICs:
With regard to corporation tax:
With regard to stamp taxes, the rates and thresholds for stamp duty land tax (SDLT) remain unchanged. The SDLT exemption for residential properties up to value of £175,000 is extended until 31 December 2009.
The rate of stamp duty/stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5 per cent.
The child element of child tax credit increases by £75 above average earnings to £2,235. The disabled child elements will be increased in line with inflation. The family element (normal and baby addition) remains frozen at £545 per year. The first income threshold for those entitled to child tax credit only will increase to £16,040. The disregard in tax credits for increases in income between one tax year and the next remains at £25,000.
From 1 April 2009, new rules will apply to tax relief for business expenditure on cars emissions being taken into account.
A package of measures is to be introduced to counter perceived abuses of the tax system. The package includes the publication of the names of deliberate tax defaulters and an offshore disclosure opportunity, and targeted anti-avoidance measures.
Other measures include:
The following changes are to be made to the income tax system with effect from 6 April 2010:
Powers to vary the income tax rates applicable to registered pension schemes were also announced. These changes replace announcements made in the Pre-Budget Report 2008.
The 2009 Finance Bill will set the main rate of corporation tax at 28 per cent from 1 April 2010. The main rate of corporation tax for companies' ring fenced profits will be 30 per cent from that date.
The small companies rate of corporation tax is to remain at 21 per cent
from 1 April 2009. The marginal relief fraction will also remain at
The rate of capital allowances for expenditure on general plant and machinery in excess of the £50,000 annual investment allowance limit will be 40 per cent. This applies to expenditure incurred between April 2009 and April 2010.
Following a lengthy period of consultation, a foreign profits package consisting of the following four elements will be introduced in the 2009 Finance Bill:
It has also been announced that provisions relating to loan relationships and derivative contracts which form part of arrangements that have a tax avoidance purpose will not be included in the 2009 Finance Bill. Draft legislation on this area had been published in December 2008. It should also be noted that the exemption from tax for dividends or other distributions arising from holdings of ten per cent or more will be extended to all companies. This is a significant change to the measures announced in the 2008 Pre-Budget Report.
Legislation will be included in the 2009 Finance Bill to change the rules affecting connected companies as follows:
HMRC have announced that if the second of these changes is abused, an anti-avoidance provision will be introduced in a future Finance Bill.
Where companies enter into arrangements with the Treasury, or other government
bodies, to secure taxpayer support, they will often have to forgo certain
tax reliefs in exchange. As some of the reliefs are given automatically
by the Corporation Tax Acts, legislation will be included in the 2009
Finance Bill to
The legislation will apply to qualifying arrangements entered into on or after 22 April 2009.
Legislation will be introduced in the 2009 Finance Bill to make changes to the enterprise investment scheme (EIS), the corporate venturing scheme (CVS) and the venture capital trust (VCT) scheme.
For all three schemes, the time limits for the employment of money invested are to change so that all of the money raised by the issue of shares will have to be wholly employed within two years of the issue of the shares or, if later, within two years of the commencement of a qualifying activity. This will replace the current requirement for 80 per cent of the money raised to be so employed within 12 months and the balance within a further 12 months. The change takes effect in respect of investments made on or after 22 April 2009.
For EIS, the following changes will be made with effect for shares issue on or after 22 April 2009:
Finally, with effect from the 2009-10 tax year, the investor carry-back restrictions will be removed and instead the total investment that will be able to be taken into account for a tax year will simply remain subject to a limit (currently £500,000).
The 2009 Finance Bill will introduce legislation to make changes to the ring fence corporation tax (RFCT) and petroleum revenue tax (PRT) rules. The changes will:
The 2009 Finance Bill will contain legislation for a new
The allowance will provide certain categories of field with a fixed allowance which can over time be offset against the 20 per cent supplementary charge payable by companies involved in the field. There will be limits on the amount that can be offset in any one year. The limits will be as follows:
This measure amends the energy efficient scheme list to include one new technology (uninterruptible power supplies) and two new sub-technologies (air to water heat pumps and close control air conditioning systems). Three existing sub-technologies (air source: single duct and packaged double duct heat pumps, ground source: brine to air heat pumps and water source:packaged heat pumps) will be removed. Minor changes will also be made to the existing criteria of both schemes.
The changes to the schemes will have effect on and after a date to be appointed by Treasury order to be made prior to the summer 2009 Parliamentary recess.
Legislation will be introduced in the 2009 Finance Bill making changes
The legislation will have effect where the transaction takes place on or after 22 April 2009 and, in relation to losses, it will have effect where those losses are incurred in accounting periods ending on or after 22 April 2009.
Legislation will be introduced in the 2009 Finance Bill to extend the period for which trading losses can be carried back against profits of earlier years from the current one-year entitlement to a period of three years, with losses being carried back against later years first.
This extension will apply to trading losses made by companies in accounting periods ending between 24 November 2008 and 23 November 2010 and to trading losses made in tax years 2008-09 and 2009-10 by unincorporated businesses.
The amount of trading losses that can be carried back to the preceding year remains unlimited. After carry-back to the preceding year, a maximum of £50,000 of unused losses will be available for carry-back to the earlier two years. This £50,000 limit applies separately to the unused losses of each 12-month period or tax year within the duration of the extension. For companies, this means a cap of £50,000 on the extended carry-back of losses incurred in accounting periods ending in the 12 months to 23 November 2009 and a separate £50,000 cap on the extended carry-back of losses incurred in accounting periods ending in the 12 months to 23 November 2010.
For unincorporated businesses, a separate £50,000 cap will apply to the extended carry-back of losses made in each of the years 2008-09 and 2009-10.
Following consultation, legislation will be introduced in the 2009 Finance Bill to:
The changes to the tax treatment of amounts added to LTIF and restrictions in relief for amounts allocated to policyholders will have effect for accounting periods ending on or after 22 April 2009 in respect of additions or allocations made on or after 22 April 2009. Changes to the floor calculation will have effect for accounting periods beginning on or after 1 January 2009 and ending on or after 22 April 2009.
Income tax payers will be charged tax on the amount which represents accrued interest paid by the Financial Services Compensation Scheme (FSCS), where a payment is made after 5 October 2008, because of the default of a financial institution such as a bank. Measures will be introduced in the 2009 Finance Bill to ensure that such payments will be treated as interest for all income tax purposes and the tax deduction rules on interest applied accordingly.
For corporation tax purposes, such payment are already taxable under
Corporate members of the Lloyd'sinsurance markets will not pay corporation tax on dividends and distributions received from UK companies after 30 June 2009. This will bring their treatment into line with general insurance companies who are not chargeable on UK dividends and distributions.
Measures will be introduced in the 2009 Finance Bill to make it harder to break a group structure or trigger anti-avoidance legislation by issuing a common commercial financial instrument, such as certain preference shares, to external investors.
Under the new rules (which will most commonly affect regulated financial institutions issuing preference shares that qualify as Tier 1 regulatory capital) companies will not lose the ability to enter into arrangements to claim and surrender group relief with other members of the group.
The new rules will apply for accounting periods commencing on or after 1 January 2008, unless an election is made to retain the existing treatment of shares issued, or treated as issued, before 18 December 2008.
New measures will be introduced in the 2009 Financial Bill to prevent unexpected stamp duty and stamp duty reserve tax (SDRT) charges which might arise where a stock lending or repo arrangement is terminated owing to the insolvency of one of the parties. A parallel provision will prevent the non-return of the securities being treated as a disposal by the lender for capital gains tax and corporation tax purposes.
Where a lender or seller buys securities to replace those lost owing to the insolvency, then the purchase will be relieved from stamp duty or SDRT, as will a borrower's replacement of collateral securities under a stock loan arrangement.
The relief will apply where the insolvency of the borrower or lender occurs on or after 1 September 2008.
As announced on 18 December 2008, changes are to be made to the rules
which apply in respect of the offset of losses by a company that computes
its losses in a currency other than sterling. The changes will be included
in the 2009 Finance Bill and are to apply to accounting periods beginning
on or after 29 December 2007, unless an election is made to defer their
application to the first accounting period beginning on or after the date
on which the
Where a company has computed losses in a currency other than sterling and these are to be set against profits of a different period, the exchange rate to be used for translating those losses into sterling will no longer be that for the period in which the losses arose. Rather it will be the exchange rate used to translate the relevant profits into sterling.
In addition, where a company changes the currency in which it computes its profits and losses, any loss carried forward or back between accounting periods and across the change in functional currency must be converted at the spot exchange rate for the date of the change.
Under powers to be contained in the 2009 Finance Bill, regulations will be made which will apply to amalgamations and transfers of business between building societies, industrial and provident societies and friendly societies.
The regulations, which will have effect for transfers of business taking place on or after 22 April 2009, will introduce more consistency in the tax consequences of transfers of business which, under current legislation, vary according to whether a transfer is made to a company or to another mutual society, and can also vary where different types of mutual society are involved in the transfer. The regulations will also clarify rules where these are currently unclear and will include anti-avoidance provisions.
The 2009 Finance Bill will include legislation to extend the eligibility
for this tax credit to individuals who have a 10 per cent or larger shareholding
in a distributing company in a
The extension, which will be subject to anti-avoidance rules, will be effective from 22 April 2009.
From 22 April 2009, individuals in receipt of distributions from offshore funds which are largely invested in equities will be entitled to a non-payable dividend tax credit . Where the offshore fund is substantially invested in interest-bearing assets, individuals receiving distributions will be treated for tax purposes as having received interest.
These rules will apply equally to all holdings in offshore funds (whether less than 10 per cent, or 10 per cent or more) and will not affect the taxation of UK investors in offshore funds which are transparent for tax purposes.
Authorised investment funds (AIFs) are chargeable to corporation tax on their taxable income at a special rate of 20 per cent. Secondary legislation to be introduced will enable UK AIFs that meet certain conditions to elect to be treated as a tax elected fund (TEF). This will move the point of taxation to the investor with the effect that the investor will then be treated as though they had invested in the underlying assets directly. The investor will be treated as receiving UK dividend income (including the non-payable dividend tax credit) and a payment of yearly interest.
The new regime will have effect on and after 1 September 2009.
The 2009 Finance Bill will include legislation to change the capital gains tax treatment of investors in offshore funds that are currently transparent for tax purposes. Under the new rules, an interest in certain offshore funds will be treated as an asset for CGT purposes, so that investors will no longer need to consider disposals of underlying assets in calculating chargeable gains. This will bring the treatment of investments in these funds into line with the treatment of investments in unit trusts.
The new rules will apply to investments in contract-based offshore funds on and after 1 December 2009, but an irrevocable election can be made from 22 April 2009 to apply the new rules retrospectively back to the tax year 2003-04.
The 2009 Finance Bill will include legislation to change the definition of an offshore fund for tax purposes and amend existing powers to provide for the modernisation of the regime in regulations. This follows the consultation on draft legislation that was published after the 2008 Pre-Budget Report.
The new definition will use a characteristics-based approach, with exceptions to ensure that fixed share capital arrangements that do not mimic open-ended arrangements will remain outside the definition. It will apply from 1 December 2009.
Legislation will be introduced to provide certainty of treatment in respect of certain transactions made by AIFs and equivalent offshore funds. The legislation applying to AIFs will apply from 1 September 2009 and the legislation applying to equivalent offshore funds will apply from 1 December 2009.
Transactions appearing on a
Investment trust companies (ITCs) which invest in interest bearing assets will be able to elect to receive a tax deduction for any interest distributions made. This will remove any corporation tax liability that would otherwise arise on the income and so move the point of taxation to the shareholder. The shareholder will be treated as receiving a payment of yearly interest.
The measure will have effect for any interest distributions made on or after 1 September 2009.
Where an election is made, an asset sold by a company to a third party can be deemed to have been transferred to another group company prior to that disposal. Legislation will be included in the 2009 Finance Bill to the effect that the gain or loss arising on the disposal can be transferred from the company making the disposal to another group company where a joint election is made. The deemed transfer of the asset will no longer be necessary and so the current restrictions on the type of the asset, and on the circumstances under which the gain or loss arose, will no longer apply.
The legislation will apply to gains or losses arising on or after the date the 2009 Finance Bill receives Royal Assent.
Following the reduction in the rate of corporation tax to 28 per cent from 1 April 2008, legislation will be introduced in the 2009 Finance Bill, to be effective from that date, which will alter the calculation of the amount of double taxation relief due on foreign dividends.
Where the company is entitled to double taxation relief in respect of underlying tax suffered on a foreign dividend, the new legislation will ensure that the amount of relief is limited by reference to the blended corporation tax rate for the period (in a case where accounting periods do not match financial years), rather than by reference to the rate in force at the time when the dividend is paid.
The 2009 Finance Bill will include provisions, to be effective from 29 April 2009, affecting the operation of the save as you earn (SAYE) scheme.
Changes are to be made as follows:
Draft legislation and explanatory notes have been published on the HMRC website.
Legislation will be included in the 2009 Finance Bill to confirm the following points for the purposes of the corporate intangible fixed asset regime:
The legislation will have effect on or after 22 April 2009 and will be treated as always having had effect.
Legislation will be included in the 2009 Finance Bill to counter financial arrangements avoidance schemes of the following type:
The legislation will have effect for debits and credits arising on or after 22 April 2009.
Draft legislation designed to counter avoidance involving the leasing of plant and machinery was published on 13 November 2008. These provisions will be introduced in the 2009 Finance Bill to ensure that, with effect for transactions entered into on or after 13 November 2008:
The following changes will also be made with effect from 22 April 2009:
With effect from 22 April 2009, companies will only be able to claim capital allowances for decommissioning expenditure which has been incurred, and paid out, in respect of decommissioning work carried out or undertaken in the accounting period.
This measure is designed to counter intra-group arrangements designed to accelerate access to decommissioning allowances in advance of the decommissioning work actually taking place.
For accounting periods beginning on or after 22 April 2009, exchange gains or losses on borrowings or currency derivatives can only be matched if they do not arise from tax avoidance arrangements. This change is intended to counter one-way bet schemes and schemes which seek to secure a tax deduction for a forward premium on a forward currency contract without giving rise to a taxable profit for the counterparty. Under a one-way bet scheme, an allowable foreign exchange loss is created if a currency moves one way. However, if it moves the other way a taxable profit does not arise.
Where an accounting period straddles 22 April 2009, the new legislation will apply to exchange gains or losses arising between 22 April 2009 and the end of the period.
Legislation will be included in the 2009 Finance Bill to ensure that receipts from the transfers of income streams will be taxed as income for the purposes of corporation tax and income tax. This legislation is the result of consultation on the use of principles-based drafting and will replace the current provisions with a rule that comprehensively taxes the sale of income streams as income. It will be effective for transfers of income taking place on or after 22 April 2009.
As a result of the consultation, certain types of transaction have been exempted from the new rules. These include sales of income that arise from loan relationships or derivative contracts where that income would have been subject to any exclusions under those rules.
A number of targeted anti-avoidance rules currently exist to ensure that amounts that are economically equivalent to interest are charged to corporation tax as interest. Legislation to be introduced in the 2009 Finance Bill will replace these provisions with a comprehensive rule intended to ensure that a return equivalent to interest is charged to corporation tax in all circumstances where it would not currently be taxed as income.
Exclusions will apply including where it is not a main purpose of the arrangements to secure that the return is not charged to tax as income.
The legislation will apply to arrangements to which a company becomes party to on or after 22 April 2009. However, it will also apply to certain arrangements in place before that date where existing disguised interest legislation would apply.
Where certain conditions are met, income tax relief can be obtained on interest paid by individuals on loans used to invest in small businesses. For interest paid on or after 19 March 2009, relief will not be available where the interest is paid as part of an arrangement that is certain to put the investor in a profitable position by virtue of the interest being eligible for relief.
Normal commercial transactions should not be affected.
Following a recent High Court case, legislation will be introduced in the 2009 Finance Bill to ensure that the tax treatment of manufactured interest payments will follow the treatment of the payments in company accounts prepared in accordance with generally accepted accounting practice.
This measure was announced on 27 January 2009 and the legislation will apply to manufactured payments made before and after that date. For deemed payments of manufactured interest, the legislation will apply only to payments made on or after 27 January 2009.
Secondary legislation is to be amended to bring in special rules that apply where:
In such cases, any exchange gain or loss on the currency derivative contract will be permanently excluded from being brought into account unless a gain arises and part or all of it is subsequently distributed to shareholders.
The new rules apply to currency derivative contracts entered into on or after 1 January 2009 with the intention of hedging the exchange risk to the future share proceeds, except where the hedge was entered into before 10 March 2009 but was no longer current at that date.
Legislation will be introduced in the 2009 Finance Bill to enable regulations to be made to prevent groups from meeting the real estate investment trust (REIT) conditions as a result of restructuring when they would not have done so had they not restructured.
In addition, owner occupied properties will be excluded from the regime
and an obstacle in the existing legislation that stops potential REITs
All of the changes will have effect on and after 22 April 2009.
The existing rules relating to real estate investment (REITs) will be made clearer and more consistent as a result of legislation to be included in the 2009 Finance Bill. The changes to be made will be effective on and after 22 April 2009 and will include:
Legislation will be introduced in the 2009 Finance Bill which seeks to ensure that it will be economically viable to issue land assets as securities in alternative finance arrangements. The legislation will remove the SDLT charge on transfers to and from bond issuers and also ensure that bond-holders do not suffer a charge.
Further legislation is also expected to ensure that parties involved are not subject to a capital gains tax charges triggered by the movement of the land to and fro and also to protect the capital allowances of the original title holder.
These provisions will create more flexible financing arrangements in what is currently a difficult market.
Legislation to be introduced in the 2009 Finance Bill will introduce favourable stamp duty land tax (SDLT) treatment for profit-making Registered Providers of Social Housing (RPSH) where purchases are made using public subsidy and also to purchasers under shared ownership schemes run by profit-making RPSH.
The new provisions will also simplify the SDLT treatment for
The 2009 Finance Bill will introduce primary legislation which will temporarily
raise the threshold for stamp duty land tax (SDLT) in respect of residential
property from £125,000 to £175,000. This replaces the SDLT
The new threshold will be applicable to land transactions which have an effective date, for SDLT purposes, falling between 22 April 2009 and 1 January 2010.
For transactions occurring on or after 22 April 2009, legislation has
been announced which will ensure that stamp duty land tax relief will
be available to all who exercise statutory rights of leasehold enfranchisement
rather than to statutory
Measures are to be introduced to prevent those with incomes of £150,000 and over from benefiting from higher rate relief on pension contributions by making abnormal payments before the relief is withdrawn from 6 April 2011.
The measures will apply from 22 April 2009 where the contributions made by such individuals exceed £20,000 a year. The contributions made will be compared to the individual's normal pattern of contributions and any excess over that normal pattern (or over £20,000, where the normal pattern is less than that figure) will be subject to a special tax charge.
A similar charge will apply in the case of members of a final salary scheme where there is a change in the normal way in which their benefits accrue under the scheme other than increases which arise under arrangements in force prior to 22 April 2009, including increases as a result of normal pay rises and progression.
The Financial Assistance Scheme (FAS) makes top-up payments to members of final salary schemes which were wound up in the period from 1 January 1997 to 5 April 2005 and had insufficient assets to meet all the members entitlements. It will in future be responsible for paying the whole of a member's pension, including lump sums.
A regulation-making power is to be introduced to enable the Financial Assistance Scheme (FAS) to be treated as if it was a registered pension scheme. This treatment is required in order that the FAS may make lump sum payments free of tax.
The Financial Services Compensation Scheme (FSCS) exists, inter alia, to provide assistance to insurance companies who are unable to meet their obligations under registered pension schemes for which they act as trustees. This could include paying compensation to a member of the pension scheme or facilitating the transfer of the member's rights to another insurer.
The FSCS is not itself a registered pension scheme and a regulation-making power is to be introduced to prevent any unintended tax consequences arising as a result of it making payments to the insurance company or the member. The regulations, when made, may have retrospective effect provided this is not to the detriment of the member.
Legislation will be introduced in the 2009 Finance Bill to extend inheritance tax (IHT) agricultural property relief (APR) and woodlands relief (WR) to property in the European Economic Area (EEA). Property qualifying for this extended relief will also qualify for capital gains tax (CGT) hold-over relief.
IHT due or paid on or after 23 April 2003 in relation to APR or WR located in a qualifying EEA state at the time of the chargeable event will become eligible for relief. The 2009 Finance Bill will provide that the earliest deadline for reclaiming overpayments on such property will be 21 April 2010.
Hold-over relief will also become available in respect of disposals of agricultural property and woodland located in a qualifying EEA state in the past. Claims in respect of the tax year 2003-04 can be made until 31 January 2010.
The ISA limits will be raised to £10,200 up to £5,100, of which can be saved in cash. The new limits apply to those aged 50 and over in 2009-10 (from 6 October 2009) and for all ISA investors from 2010-11 onwards (from 6 April 2010).
The government will contribute £100 per year to the child trust fund account of disabled children and £200 to the accounts of severely disabled children. The payments will start in April 2010, in respect of children in receipt of disability living allowance at any time during 2009-10. The payments will not count towards the £1,200 yearly contribution limit.
The six-year threshold for relievable gifts which a person can make before
In a limited range of circumstances, non-resident individuals may benefits from UK personal allowances and reliefs where they are a Commonwealth citizen. Because it is apparently not compliant with the Human Rights Act, the 2009 Finance Bill will include a measure to withdraw this entitlement. This will take effect on or after 6 April 2010.
The majority of individuals will still benefit, however, through other conditions, or via Double Taxation Treaties.
The 2009 Finance Bill will include provisions to ensure that the
Minor amendments are also to be made to the original legislation to ensure the rules are clearer to understand and therefore simpler to operate.
Legislation will be introduced in the 2009 Finance Bill to stop the avoidance of tax on the benefit of living accommodation where accommodation is provided to employees by reason of their employment through the payment of a lease premium.
This measure will ensure that where a lease premium is paid for a lease of 10 years or less, the same tax treatment will follow as if the lease premium were actual rent paid. The taxable amount in any tax year will be the amount of the lease premium spread over the duration of the lease, plus the amount of any rent paid by the person at whose cost the accommodation is provide, less any amount made good by the employee.
The legislation will apply to leases entered into or extended on or after 22 April 2009.
Legislation will be introduced in the 2009 Finance Bill to counter schemes that are designed to exploit income tax loss relief rules using offshore life insurance policies. The measure amends the rules on income tax loss relief to put beyond any doubt that such relief does not arise on these policies.
The measure has effect on and after 6 April 2009. Transitional provisions may also apply to 2008–09 for certain transactions taking place on or after 1 April 2009.
Legislation will be introduced in the 2009 Finance Bill to close down avoidance schemes that seek to abuse reliefs available for employment-related liabilities and losses incurred by employees and former employees during the course of employments established for the purposes of the schemes.
The measure will have effect on the tax liabilities of affected persons on and after 12 January 2009. Individuals who have made a claim between 12 January 2009 and 1 April 2009 that is precluded by the proposed change will not be liable to penalties or surcharges provided they re-order their affairs and pay any additional tax due in accordance with the proposed change or before 28 April 2009.
Anti-avoidance measures have been announced to prevent complex schemes
in which manufactured overseas dividends are utilised to secure tax advantages
and generate pre-tax losses. The measures will deny relief for foreign
withholding tax where the recipient of the manufactured dividend has not
The 2009 Finance Bill will include legislation to clarify the limitation on the credit for foreign tax paid on trade receipts of a bank.
The measure will also ensure that, when calculating its double tax relief, a bank will not be able to avoid the deduction of a proportion of its average funding costs applied over all transactions by allocating specific funds to specific investments.
The 2009 Finance Bill will introduce legislation which will confirm that where foreign tax that has been paid is repaid, any double tax relief claimed in respect of that tax will be denied or withdrawn.
There is a statutory requirement for companies to make accurate returns in relation to tax and other duties. However, there is no requirement to ensure that internal accounting systems are adequate to ensure that this can be done. Legislation, to be introduced in the 2009 Finance Bill, will require senior accounting officers of large companies and groups to:
The companies will also be required to notify HMRC of the identity of the senior accounting officer. HMRC will be able to charge penalties on the senior accounting officer and the company for a careless or deliberate failure to fulfil the obligations set out above.
These obligations will apply to returns due to be made for accounting reference periods beginning on or after the date the 2009 Finance Bill receives Royal Assent.
The 2009 Finance Bill will include legislation enabling HMRC to publish the names and details of those who are penalised for deliberate defaults leading to a loss of tax of more than £25,000. The new provisions will be brought into force by Treasury Orders from dates to be specified.
Details will be published quarterly and will be removed from publication one year later. There will be an exemption in cases of unprompted disclosure or full prompted disclosure. The new provisions will not apply to tax credits.
From 6 April 2011, the rates for company car tax will change. The £80,000 price cap used when determining the car benefit charge will be abolished, as will the discounts currently available to various cars using alternative fuels.
Following the announcement of the abolition of the
The revised legislation contains specific anti-avoidance rules to prevent the generation of balancing allowances by selling cars in single asset pools at less than market value. There are also rules restricting balancing allowances available to companies that cease a qualifying activity of providing cars (including cars with emissions over 160 g/km) where another company in the same group of companies carries on a similar qualifying activity.
The new rules will generally have effect for expenditure incurred (or leases entered into) on or after 1 April 2009 for businesses in the charge to corporation tax, and on or after 6 April 2009 for businesses in the charge to income tax.
Changes are made to the duty rates for a range of fuels.
Taxpayers that have previously made exempt supplies of land and buildings and now wish to opt to tax them require HMRC’s formal permission to do so, unless they meet any one of four automatic permission conditions (APCs) published as tertiary legislation in Notice 742A – Opting to Tax Land and Buildings.
To simplify the procedure in these situations, one of the current APCs (condition 3) is to be replaced from 1 May 2009 by a new APC which more taxpayers should be able to satisfy. This will allow more taxpayers to opt to tax without seeking HMRC’s prior permission.
In addition, two related informal concessions whose operation requires taxpayers to contact HMRC and complicates the procedure for opting to tax will be withdrawn in whole or in part on 1 May 2010.
The five per cent reduced rate of VAT currently applicable to supplies of children's car seats will be extended with effect from 1 July 2009 to cover the bases for such seats.
For prescribed accounting periods beginning on or after 1 May 2009, the table of VAT scale charges for taxing private use of road fuel.
From 1 May 2009, the amount of the annual VAT registration threshold rises to £68,000 from £67,000 and the VAT deregistration threshold rises to £66,000 from £65,000.
From the same date, the registration and deregistration limits for relevant acquisitions from other member states rises to £68,000 from £67,000.
Legislation will be introduced in the 2009 Finance Bill for the current
standard VAT rate of 15 per cent to revert to 17.5 per cent on 1 January
2010. Amendments will also be made to
To counter schemes that fix the VAT payable on supplies at 15 per cent
even though the goods or services concerned are not due to be delivered
or performed until or after the rate reverts to 17.5 per cent (
One set of measures were announced in a written ministerial statement of 25 November 2008 and have effect on or after that date. They will apply the supplementary charge where the supplier attempts to fix the tax point by issuing an invoice or receiving payment before the rate rises to 17.5 per cent, the customer cannot recover all the VAT on the supply and either:
The other measure, announced on 31 March 2009 and effective on and after that date, will apply the supplementary charge where a pre-payment exceeding £100,000 is made before the rate rises in respect of a transaction happening after the rate rise. There may be a let-out, however, where a pre-payment is in accordance with normal commercial practice.
Participation fees for playing bingo and other games of chance will be exempt from VAT on and after 27 April 2009.
Various changes will affect bingo duty including an increase in the rate
from 15 per cent to 22 per cent for any accounting period beginning on
or after 27 April 2009. The scope of gaming duty and remote gaming duty
is to be extended and the existing excise definitions of
A future consultation on the reform of amusement machine licence duty has also been announced.
Changes to the rules determining the place of supply of services will be introduced in three phases commencing with effect from 1 January 2010, 1 January 2011 and 1 January 2013. The changes are part of a package to simplify and modernise the VAT system for cross-border trading across the EU and to counter fraud, the other aspects of which are dealt with in Budget Report Notes BN75, 76 and 77.
The current basic rule regarding the place of supply of services is that VAT is due where the supplier has established their business, although there are several exceptions to this rule. The new basic rule for business to business supplies will be that the place of supply is where the customer is established. For supplies to non-business customers, the basic rule will remain unchanged. As now, however, there will continue to be exceptions.
Information about all aspects of the
Changes are to be made to the time of supply rules for cross-border supplies of services in the case of supplies treated as made in the UK by the person who receives them. The changes are linked to the changes described in Budget Report Note BN76 and other related changes are described in BN74 and BN77.
Under the current rules for this type of cross-border supply, the time of supply (tax point) is normally when the supply is paid for. From 1 January 2010, the tax point for single supplies will occur when the service is completed or when it is paid for, if this is earlier. For continuous supplies, the tax point will be the end of each billing or payment period. Where there are no such periods, it will be 31 December each year or the date when a payment is made, if earlier.
Information about all aspects of the
On and after 1 January 2010, UK businesses will have to complete EC Sales Lists (ESLs) for the supply of taxable services where the place of supply is in another EU member state. There is no such legal requirement at present. The main purpose of the extension of ESLs to services is provide a system of control for intra-EC supplies of services where the customer is required to account for the reverse charge in their country.
Further secondary legislation will be introduced later in 2009 to speed up the submission of ESLs, reduce the time available to HMRC to collect, process and exchange ESL data with other tax administrations and increase the frequency with which ESLs have to be submitted
These changes are part of a package to simplify and modernise the VAT system for cross-border trading across the EU and to counter fraud, the other aspects of which are dealt with in Budget Report Notes BN74, 75 and 77.
From 1 January 2010, businesses established in the UK will submit claims for refunds of overseas VAT to HMRC electronically on a standardised form rather than direct to the tax authorities in the member state of refund. Other changes from the current paper-based system include an extension of the period allowed for making a claim, a reduction in the time available to the tax authorities to make refunds, interest payable to the claimant where refunds are delayed and a right of appeal against non-payment.
The changes are part of a package to simplify and modernise the VAT system for cross-border trading across the EU and to counter fraud, the other aspects of which are dealt with in Budget Report Notes BN74, 75, and 76.
Information about all aspects of the
The standard rate of landfill tax will increase to £48 per tonne for any standard-rated disposal of waste made, or treated as made, on or after 1 April 2010.
Following case law, the 2009 Finance Bill will introduce legislation to confirm which uses of material on a landfill site qualify as non-taxable disposals of waste. The new legislation will also ensure that HMRC have access to relevant information surrounding such uses in order to ascertain whether a disposal has taken place and also ensure that the tax return form can be prescribed in public notice.
A restricted entitlement to climate change levy relief is to be introduced for manufacturers of certain plastic products in return for a reduction of energy emissions or usage.
Climate change agreements allow relief from levies in exchange for making reductions in emissions or energy usage. A new measure will be introduced which will enable HMRC to recover levy where a facility fails to reach the targets set in its climate change agreement.
From 1 January 2010, supplies made of low value solid fuel valued at £15 or less per tonne will become subject to the climate change levy.
Amusement machine licence duty (AMLD) is set to rise across all current
categories of gaming machines. New categories of gaming machine will also
be introduced which will be exempt from AMLD. In addition, increases in
stake and prize levels will be introduced for category C machines and
changes will apply to
A new measure has been announced which will withdraw the warehousing for export drawback scheme applicable to alcoholic liquors only for alcoholic liquors warehoused for export on or after 1 June 2009.
The drawback provisions will also be subject to a technical amendment which will allow the taxpayer the right to appeal where HMRC are seeking to recover what is - in their view - an ineligible drawback.
Rates of duty on tobacco products imported into, or manufactured in, the UK are set to rise by two per cent from 6pm on 22 April 2009.
From 23 April 2009, all duty rates for alcohol will increase by two per cent.
Legislation will be introduced in the 2009 Finance Bill to provide a means of reclaiming overpayments of income tax, capital gains tax and corporation tax where there is no other statutory route. It will replace any non-statutory claims. The legislation will remove the requirement that an overpayment must be the result of a mistake in a return and that it must be made under an assessment.
The measure will have effect for claims made on or after 1 April 2010.
Legislation will be introduced in the 2009 Finance Bill to:
The legislation for MPPs will not be introduced before April 2011, the collection of small debts through PAYE is likely to begin from April 2012, and the third party information power will have effect on and after the date that the 2009 Finance Bill receives Royal Assent.
Legislation will be introduced in the 2009 Finance Bill to apply the
compliance checking framework introduced by the
The repeal of specialist information powers will be introduced by secondary legislation once the Finance Bill 2009 receives Royal Assent. The record-keeping requirement, information and inspection powers will have effect from a date to be appointed by Treasury Orders (expected to be 1 April 2010). Time limits for making assessments and claims need a transitional period and are not expected to become fully operative until 1 April 2011.
Legislation will be introduced in the 2009 Finance Bill to reform penalty regimes for the late filing of tax returns and late payment of tax. The new regimes will replace the current variety of penalties and will treat late payment and late filed returns separately. Whilst broadly aligned across the taxes, they are modified for PAYE and CIS.
The measure includes applying penalties for the first time to all employers who are late in making monthly PAYE and NICs payments and to companies paying corporation tax late. It provides for removing late payment penalties where taxpayers have agreed a time to pay arrangement with HMRC whilst creating a more robust response to prolonged and repeated delay.
The new provisions will take effect from dates specified by Treasury Orders
Legislation will be introduced in the 2009 Finance Bill to create a harmonised interest regime for the first time for all taxes and duties administered by HMRC with the exception of corporation tax (CT) and petroleum revenue tax (PRT). Provision will be made for the automatic setting and implementation of interest rate changes.
It is expected that the legislation to apply the harmonised interest regime to CT and PRT will be introduced in the 2010 Finance Bill.
For those taxes where HMRC currently charge and pay interest, rates will be aligned by Treasury Order and will have effect shortly after the date that the 2009 Finance Bill receives Royal Assent.
Legislation will be introduced in the 2009 Finance Bill requiring HMRC to prepare and maintain a Charter which will set out standards of behaviour and values to which HMRC will aspire in dealing with taxpayers and others. HMRC will be required to report annually on how well it is doing in meeting the standards in the Charter.
The Charter must be in place by 31 December 2009 and HMRC plans to launch the Charter by Autumn 2009.
Legislation will be introduced in the 2009 Finance Bill to clarify when HMRC officers and (following Royal Assent to the Borders Citizenship and Immigration Bill) UK Border Agency officers can use their powers to check EU travellers and to verify whether travellers are arriving from the EU.
The changes will have effect on and after the date that the 2009 Finance Bill receives Royal Assent.