Pre-Budget Report 2009

Yesterday's Pre-Budget Report was foreshadowed by discussion of the taxation of bankers' bonuses and a 50% bank payroll tax was duly delivered, but, as our full summary will explain, several widely applicable measures were also announced.

Rumours had been circulating of a single rate of corporation tax and there were fears of changes to capital gains tax, but neither of these came about. No doubt the rumours will re-emerge in the lead up to the general election and the subsequent Finance Bill.

Possibly the most widely relevant tax raising measure (are national insurance contributions tax?) was a further 0.5% increase in all national insurance contributions for 2011-12. Increases in thresholds will mitigate the impact on the lower paid.

Also, employees earning over £130,000 will fall within the anti-forestalling measures in respect of pension contributions where their employer makes contributions on their behalf. Those affected may need immediate advice.

Of help to struggling businesses will be the extension of the ‘time to pay’ scheme for tax liabilities and of, an amended, empty property relief from business rates.

Further help will be available to SMEs engaged in research and development with an extension of the available tax credits and a reduced rate of corporation tax was announced for certain income from patents.

On the downside, those with furnished holiday lettings will be taxed under the ‘general’ property business rules from 6 April 2010.

As in previous statements, the Chancellor continued his attack on tax avoidance, with targeted anti-avoidance measures in the areas of plant and machinery leasing, capital allowances, index-linked gilt edged securities, insurance premium tax and inheritance tax together with an extension of the disclosure rules for certain stamp duty land tax schemes. These are very specific measures, so please contact us if you are concerned that you may be affected.

The green agenda was again met by changes to capital allowances and the company car tax regime to further encourage the use of energy efficient vehicles.

Finally, the following pre-announced changes were either confirmed or amended:

• VAT will revert to 17.5% on 1 January 2010.
• The SDLT ‘holiday’ will end on 31 December 2009.
• There will not be an increase in the nil rate band for inheritance tax on 6 April 2010.
• There will not be an increase in the small companies rate of corporation tax on 1 April 2010.

More detail can be found in our full summary report via the link on the right and we will be contacting clients individually where we believe measures will be directly relevant to them, but if you would like to discuss how the Pre-Budget Report will impact you or your business, or if you have any other tax queries please telephone either Alastair McQuater on 020 7556 1427 or your usual Buzzacott contact.