Budget Update March 2010 Personal Tax Announcements
PERSONAL TAX ANNOUNCEMENTS
Changes to Stamp Duty Land Tax (SDLT)
First time buyer’s concession
One of the more politically charged announcements today was the introduction of a new relief for first time home buyers which will exempt them from StampDuty on a property purchase up to £250,000 – this is effective for transactions taking place on or after 25 March 2010 and before 25 March 2012. This additional relief is partly funded next year by the increase in SDLT on more expensive property sales.
To qualify all of the following conditionswill need to be met:
1. The individual or individuals jointly purchase a major interest in land which is wholly residential, and
2. The consideration is more than £125,000 but not more than £250,000, and
3. The individual(s) intends to occupy the property as his/her or their only or main residence and has or have not previously purchased such an interest or its equivalent anywhere in the world.
New rate of Stamp Duty for expensive properties
From 6 April 2011 a new 5% SDLT rate will be applied to residential property sales where consideration exceeds £1m.
Income tax rates and thresholds
The changes to tax rates and thresholds announced in the pre-budget report last year have been confirmed, including the advent of the 50% income tax rate for tax payers with taxable earnings in excess of £150,000 per annum.
A reminder of 2010-11 position is set out below:
- the basic rate will remain at 20%
- and higher rate will remain at 40%
- the additional rate will be set at 50%
- the basic rate limit will remain at £37,400
- the starting rate limit for savings will remain at £2,440
- the personal allowances will remain at their 2009-10 amounts.
From 2010-11 the additional 50% rate will apply to taxable income above £150,000.
From 2010-11 the amount of the personal allowance will be gradually withdrawn for all individuals (regardless of age) with "adjusted net incomes" above £100,000. The rate of reduction is £1 for every £2 above the income limit.
NIC rates and thresholds
Apart from minor adjustments to the Lower Earnings Limit for 2010-11, NIC rates and thresholds remain as in 2009-10.
The previously announced combined increase of 1% in the main rates of NIC will be effective for 2011-12.
The restriction of tax relief for tax payers earning in excess of £150,000 per annum is confirmed. This will take effect from 6 April 2011.
The Registered Pensions Scheme 2010-11 Lifetime Allowance of £1.8 million and Annual Allowance of £255,000 will continue to apply at these levels for a further five tax years, i.e. up to and including the tax year 2015-16.
Furnished Holiday Let Property
As previously announced the special tax concessions offered to owners of qualifying Holiday Let Property will cease from 6 April 2010. From this date, income from such property will be taxed in the same way as income from other property rental businesses.
The current Nil Rate Band of £325,000 will be frozen at this level for all tax years up to 2014-15.
Company Car Tax changes
A new 10% car benefit rate will be introduced on 6 April 2012 for all company cars with emissions up to 99g/km.
Additionally, from 6 April 2010 to 5 April 2015 there are two further changes to the chargeable benefit in kind for company cars and vans with zero emissions or emissions up to 75g/km. These are:
- the first change is full relief from the chargeable benefit in kind on company cars and vans which cannot produce more than 0g/km CO2 engine emissions under any circumstances when driven
- the second change reduces the chargeable benefit in kind on company cars which have an approved CO2 emissions figure of exactly 75g/km or less, to 5% of list price.
A number of changes to tax credits were announced including:
- From April 2012 an increase in the child element of £4 per week for 1 and 2 year olds.
- From April 2010 awards for fixed period childcare costs (such as claims of a few weeks during the school holidays) will be averaged and paid over that fixed period rather than averaged over a year. This will enable families to receive all the financial support towards their childcare costs they are entitled to receive for these periods when they need it.
- From 6 April 2011, people aged 60 and over will qualify for Working Tax Credits if they work at least 16 hours a week.
- As announced at the 2009 Pre-Budget Report and confirmed at Budget on 24 March 2010, from 6 April 2010:
- the Child element in Child Tax Credit will increase by £20 above earnings indexation to £2300 per year. An increase of £65 per year overall
- the disabled elements of Child Tax Credit will increase by 1.5%
- the elements of the Working Tax Credit (except the childcare element) will increase by 1.5%
maximum amounts for child care, family and baby element for Child Tax Credit, the income disregard, the first and second tax credit threshold and the withdrawal rates remain unchanged; and
- the income threshold for those on child tax credit only rises to £16,190.
From 12 April 2010 Child Benefit rates and Guardians Allowance will increase by 1,5%.
This Budget sets out the action the Government is taking to promote long-term sustainable growth.
If you feel that these changes will affect you and your business then please don’t hesitate to give us a call in the office for further clarification.