Investment Property Accountants - WARR & CO

Investment Property Accountants

The 2010 Budget Summary

The Chancellor presented his 2010 Budget on 24 March 2010.

Many of the tax changes proposed were included in the 2009 Autumn Statement and there was very little that was new. We highlight below the areas that we believe are of most relevance to our clients.

Personal Allowances and Tax Rates

The Chancellor confirmed his announcement made in the Autumn Statement that there would be no increases in personal allowances or the level at which 40% tax is payable. The new 50% rate on incomes above £150,000 has been confirmed and personal allowances will be tapered at a rate of £1 for each £2 of income above £100,000. This equates to a 60% rate on those with incomes between £100,000 and £112,950. So effective rates are as follows:-

Taxable Income

2010/2011

2009/2010

up to £6,475

0%

0%

£6,475 - £43,875

20%

20%

£43,875 - £100,000

40%

40%

£100,000 - £112,950
60%
40%
£112,950 - £150,000
40%
40%
£150,000 +
50%
40%

The small 10% band is retained for investment income.

In 2010/11 an individual can receive total gross income of £43,875 (2009/10 £43,875) before paying higher rate tax.

 

Capital Gains Tax (CGT) and Inheritance Tax (IHT)

The CGT exemption remains at £10,100 and the rate remains at 18%. The IHT exemption remains at £325,000 and the rate remains at 40%. The Chancellor announced that the IHT exemption would be frozen for 4 years.

There was one welcome change to CGT, entrepreneurs relief has been doubled to £2 million.

 

National Insurance (NI)

The rates of National Insurance have been frozen at 2009/10 levels and therefore will be as follows in 2010/11.

Class 1

Annual Income

Employees NIC

Employers NIC

up to £5,715

Nil

Nil

£5,715 - £43,875

11%

12.8%

over £43,875

1%

12.8%

Class 2

£2.40 per week

Class 3

£12.05 per week

Class 4

Annual Income

NI Rate

£0 - £5,715

Nil

£5,715 - £43,875

8%

over £43,875

1%

There is a proposed 1% increase in National Insurance rates due to commence on 6 April 2011. At the same time it is proposed to increase the Primary Earnings Threshold to cushion lower paid employees against the effects of this increase.

 

Value Added Tax (VAT)

The registration and de-registration thresholds have been increased to £70,000 and £68,000 respectively (2009/10 £68,000 and £66,000).

 

Corporation Tax

The proposed introduction of a 22% rate for small companies has been delayed for a second time and is now expected to commence on 1 April 2011. The rates applying to a company which has no associates will remains as follows:-

Annual Profits

Tax Rate

£0 - £300,000

21%

£300,001 - £1,500,000

29.75%

over £1,500,000

28%

 

Capital Allowances

The Annual Initial Allowance introduced a year ago is being doubled to £100,000. The new rate will apply from 1 April 2010 for companies and 6 April 2010 for unincorporated businesses.

 

Savings

The ISA limit is increased for all individuals to £10,200 of which 50% may be held in a cash ISA.

There were no changes to VCT’s or EIS’s.

 

Comment

There was very little new in this Budget, but with an election imminent it may be that a second 2010 Budget perhaps in June will result in significant changes.

 

Disclaimer


This document has been produced for general guidance only and does not constitute tax advice. Whilst every care has been taken in its preparation, Warr & Co will not accept liability for any loss incurred as a result of any use made from this document or its contents. We will be happy to offer specific advice to clients when requested. Should you have any queries or wish to discuss any of the points raised, please contact Tim Warr or Peter Edwards on 0161 477 6789.

Date of Article: 30th March 2010

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This domain is owned by Warr & Co Chartered Accountants which is a member of the Institute of Chartered Accountants in England & Wales (ICAEW). Whilst the information detailed here is updated regularly to ensure it remains factually correct, it does not in any way constitute specific advice and no responsibility shall be accepted for any actions taken directly as a consequence of reading it. If you would like to discuss any of the points raised and / or engage our services in providing advice specific to your personal circumstances, please feel free to contact Peter Edwards on 0161 477 6789 or email us at info@warr.co.uk

 

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