24th March 2010 BUDGET PROPOSALS
AND CHANGES FOR 2010/2011 previously announced
(Subject to details in the Finance Bill)
Ellis Atkins have taken all due care in the presentation of these notes. No responsibility for loss occasioned to any person or company acting or refraining from action as a result of any material in these notes can be accepted by Ellis Atkins, its partners or staff. Please contact us or your own professional advisor for advice specific to your circumstances.

1.1 The basic rate remains at 20%.

1.2 The higher rate remains at 40%, with the threshold unchanged at £37,400.

1.3 From 2010/2011 there will be an additional higher rate of 50% for taxable income above £150,000.

1.4 A Bank Payroll Tax rate of 50% on bonuses paid by banks of more than £25,000 came into force on 9th December 2009. This is charged on the bank rather than the individual.

1.5 The tax rate for investment income (other than dividends) remains at 20%, but the 10% lower rate band is available for savings income only, up to a limit of £2,440, if not already utilised by earned income and pensions. The higher rate and additional rate for savings are at 40% and 50% of the grossed up income.

1.6 The tax credit on dividends remains at 10% and this is not repayable.

As before, no additional tax is payable where taxable income is below the higher rate threshold. The higher rate on dividends remains at 32.5% of the grossed up income (equivalent to 25% of the net dividend). From 2010/2011 the additional rate on dividends will be at 42.5% of the grossed up income (equivalent to 36.11% of the net dividend) for taxable income above £150,000.

The age allowances abate by £1 for every £2 of income over £22,900 until they are reduced to the basic allowances. This level is reached at incomes from £28,930 for single people aged 65 to 74 to £37,820 for married people aged 75 and over.

From 2010/2011 the basic personal allowance for individuals will be reduced by £1 for every £2 above an adjusted net income above £100,000. The personal allowance will be reduced to nil for incomes of £112,950 and above.

1.8 Child Tax Credit

The Child Tax Credit (CTC) is based on joint incomes. The full child element payment is increased from £2,235 to £2,300 and is received directly from HMRC. The income threshold for those entitled to CTC only but not Working Tax Credits (WTC), rises to £16,190. The income threshold for CTC family element remains at £50,000, reducing for joint incomes up to about £58,000. The family element remains frozen at £545 per year. Further payment of up to £545 is given in the year of a child's birth, reducing for incomes up to £66,000. Claims must be made separately from Tax Returns. If income increases by more than £25,000 or personal circumstances change, then HMRC must be informed within 1 month in accordance with the notes sent with Award notices.

1.9 Car and fuel benefits

The system of car and fuel benefits based on the level of carbon dioxide emissions continues. From 2010/2011 the 35% maximum percentage of the list price of a car (capped at £80,000), is reached at 230 g/km. This will be reduced to 225 g/km from 2011/2012.

Qualifying low emissions cars (cars with CO2 emissions of 120g/km or less) are assessed at 10% of the list price for petrol cars and 13% for diesel. Qualifying cars producing ultra low emissions (75g/km or less) are assessed at 5%.

Cars manufactured to run on E85 bio fuel continue to receive a 2% discount.

Cars propelled solely by electricity will have the rate reduced from 9% to 0%. This measure will run for 5 years.

From 2011/2012 the £80,000 price cap that currently applies for calculating the cash equivalent of the car benefit will be abolished.

The figure used as the basis for calculating the benefit of private fuel received for a company car is increased from £16,900 to £18,000 from 2010/2011.

1.10 Van benefits.

As before, there is no benefit charge for employer provided vans that have insignificant or no private use.

The benefit charge for unrestricted private use of employer provided vans remains at £3,000, with an additional £550 if the employer also provides fuel for private use (increased from £500).

1.11 Authorised Mileage Rates

The single authorised rate for all vehicles for business use of employees' own vehicles remain at 40p for the first 10,000 miles and 25p there after for cars, 24p for all miles for motorcycles and 20p for bicycles.

1.12 From 2007/2008 tax returns for individuals, trusts and partnerships have two separate filing deadline dates. Paper returns are to be filed by 31st October and for returns filed online the date will remain at 31st January. From 2010/2011 a £100 fixed penalty will be imposed for the late submission of returns, regardless of the level of tax liability.

1.13 From 2007/2008 the “enquiry window” for income tax returns ends 12 months after the filing of the return, rather than the anniversary of the filing deadline. This also applies to Corporation Tax returns for accounting periods ending after 31st March 2008.