2009 Budget summary for business owners

K&H Tax director Andy Scott has prepared a summary of the Budget aimed at areas relevant to owner-managed businesses.

Highlights are

• New tax rate of 50% for earnings above £150,000 starting from 6 April 2010. The tax payable on dividends at this level will increase from the current 25% to 36.11%

• Personal allowances to be gradually reduced for earnings of more than £100,000 per year. The personal allowance is reduced by £1 for every £2 of income above £100,000

• Corporation tax small companies rate to remain at 21% and main rate at 28%, the planned increase has been abandoned.

• In addition to the £50,000 investment allowance for capital allowances a new first year allowance has been introduced for expenditure over £50,000. This will be 40% for the coming twelve months.

• The three year corporation tax loss carry back to apply to periods ending up to 23 November 2010.

• ISA limits increased £10,200 (cash £5100) for over 50’s now and for everybody else from next tax year

• Naming and shaming of tax defaulters (people and companies who try to evade ,more than £25,000 in tax)

• Company car tax changes again from next year, the £80,000 price cap has been abolished. This will be a blow to the luxury car market.

• Changes to tax relief on car lease payments on new agreements from 1.4.2009

• New  fuel scale rates for VAT

• VAT registration threshold increased to £68,000

• VAT goes back to 17.5% on 1^st January 2010

• Increased penalties for late tax returns from 6 April 2010.

You will find all of the budget information broken down into relevant headings on the Directgov website.

For our clients, we will of course be reviewing the relevance of these changes on an individual basis, either at our next accounts review meeting or before if necessary.

Please contact either Andy Scott or Susan Kemish if you have any questions about this.