Essentials

News

Each quarter, we publish a newsletter and annually a budget summary for our clients
detailing the latest tax and business information relevant to the small business.

You can download the latest of these here in PDF Format.

Newsletter Budget 2009

If you use our Weekly Till Sheets or Mileage Log Sheets you can download them here

Weekly Till Sheet Mileage Log Sheet

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Information

income tax rates | main income tax reliefs | tax credits | car benefit assessment | tax free mileage rates |individual savings accounts (ISA's) | national insurance contributions | personal pensions | rates of inheritance tax | capital gains tax | corporation tax | main capital allowances | value added tax | vat scale rates on private fuel | vat flat rate scheme | stamp duty | pensions and benefits | national minimum wage | earliest due date to payment of tax

INCOME TAX RATES	2009/2010	2008/2009
Basic rate - 20%	£0 - £37,400	£0 - £34,800
Highest rate - 40%	over £37,400	over £34,800

Savings income rate - 10% for income within the starting rate band, 20% for income within the basic rate band and 40% above that. Dividends - 10% for income below the basic rate limit and at 32.5% above that.

MAIN INCOME TAX RELIEFS	2009/2010	2008/2009
Single person	£6,475	£6,035
Age Allowance Single person - Age 65-74* - Age 75 or over* Married Couple - Age 65-74+ - Age 75 or over+ Income Limit	£9,490 £9,640 £6,865 £6,965 £22,900	£9,030 £9,180 £6,535 £6,625 £21,800
Blind person's allowance	£1,890	£1,800
*Maintenance payments (born before 5/4/35)**	£2,350	£2,350

+ only available if born before 6 April 1935
+ Age Allowances are reduced £1 for every £2 by which income exceeds the income limit, until the age allowance is reduced to the normal allowance. Personal allowance is reduced before married couple's allowance. MCA is reduced to a minimum of £2,440 (2006/07: £2,350.

IMPORTANT LIMITS	2009/2010	2008/2009
Charitable donations under payroll giving scheme	no limit	no limit
Golden handshake exemption	£30,000	£30,000
Venture capital trusts**	£200,000	£200,000
Gift aid - minimum	no minimum	no minimum
Rent a room exemption	£4,250	£4,250
Enterprise Investment scheme*	£500,000	£500,000
Enterprise Management Incentive Investment	£120,000	£120,000

*Relief restricted to 20%
** Relief restricted to 30% - must now be held for 5 years

WORKING TAX CREDIT (WTC) 2009/2010
BASIC ELEMENT	LONE PARENT ELEMENT	2nd ADULT ELEMENT	30 HOUR ELEMENT	DISABILITY ELEMENT	SEVERE DISABILITY ELEMENT	50 PLUS ELEMENT		CHILDCARE ELEMENT
						16 to less than 30hrs work pw	Over 30 hrs work pw	80%of cost Max / Max 1 Child
£1,890pa £36.35 pw	£1,860pa £35.77pw	£1,860pa £35.77pw	£775pa £14.90pw	£2,530pa £48.65pw	£1,075pa £20.67pw	1,300pa £25.00pw	£1.935pa £37.21pw	£300pw / £175pw

CHILDRENS TAX CREDIT (CTC) 2009/2010
FAMILY ELEMENT	BABY ADDITION (under 1 year)	CHILD ELEMENT	DISABLED CHILD ELEMENT	ENHANCED DISABLED CHILD ELEMENT
£545pa £10.45 pw	£545pa £10.450pw	£2,235pa £42.98pw	£2,670pa £51.35pw	£1,075pa £20.67pw

HOW WTC/CTC IS CALCULATED

Those entitled to CTC only: income less than £16,040 pa or £308.46pw - full CTC.
Those entitled to WTC & CTC income less than £6,420pa or £123.46pw - full WTC & CTC
Tax Credits reduced by 39p for every £1 over the threshold.
Family Element of CTC retained until income over £50,000pa then tapers at £1 for each £15 .
No Capital limits
First £25,000 income disregarded.

PENSION CREDIT
The figures to be used in calculating Pension Credit entitlements are	2009/2010	2008/2009
Standard minimum guarantee - single person - couple Additional amount for severe disability - single person - couple (one qualifies) - couple (both qualify) Additional amount for carers	£130.00 £198.45 £52.85 £52.85 £105.70 £29.50	£124.05 £189.35 £50.35 £50.35 £100.70 £27.75
Savings credit - single person - threshold - maximum	£96.00 £20.40	£91.20 £19.71
Savings credit - couple - threshold - maximum	£153.40 £27.03	£145.80 £26.13
Disregards Standard earnings Couple's earnings Higher Earnings (carers, part-time fireman etc) War disablement pension War widow'spension Armed Forces Compensation Scheme Widowed parent's allowance Income from a subtenant+	£5.00 £10.00 £20.00 £10.00 £10.00 £10.00 £10.00 £20.00	£5.00 £10.00 £20.00 £10.00 £10.00 £10.00 £10.00 £20.00
Deductions from awards Recovery of overpaid Pension Credit - ordinary overpayments - claimant convicted of fraud Recovery of Council Tax, housing, fuel and water costs Child Support - standard deduction - lower deduction	£9.15 £12.00 £3.05 £6.10 £3.05	£9.15 £12.00 £3.00 £6.10 £3.05
Income from investments The capital disregard remains £6,000 (£10,000 for claimants living permanently in a care home). The deemed weekly income from capital in excess of the disregard remains £1 for each £500 or part thereof. +For income from a boarder, the disregard is £20 plus half the balance of the amount paid by the boarder

CAR BENEFITS 2009/2010 - CARS WITH C02 EMISSION FIGURE*
Grams per litre	Fuel	120 or less	To 139	140	145	150	155	160	165	170	175	180	185	190	195	200	205	210	215	220	225	230	235
% of Car's price taxed	Petrol Diesel	10 13	15 18	16 19	17 20	18 21	19 22	20 23	21 24	22 25	23 26	24 27	25 28	26 29	27 30	28 31	29 32	30 33	31 34	32 35	33 35	34 35	35 35

You can find your vehicle CO2 emission fiqure at
SMMT - CO2 Emission Service

CARS WITH NO CO2 EMISSION FIGURE & CARS 1ST REGISTERED BEFORE 1/1/98
Registered before 1st January 1998 % rate	1400cc or less 15	1401cc -2000cc 22	2001cc and more 32	Rotary engine 32
Registered after 1st January 1998 % rate	15 (Diesel + 3%)	25 (Diesel + 3%)	35	35

CAR BENEFITS - CARS THAT RUN ON ALTERNATIVE FUELS & TECHNOLOGIES
Type of Car	Electric only	Hybrid electric	Gas only	Bi-fuelwith CO2 Emissions figure	Bi-fuelconversion or other bi-fuel not type B	Cars manufactured for E85 fuel
Code	E	H	B	B	C	G
Discount from 2006/7	6%	3% (note 2)	2% (note 1)	2% (notes 1 & 2)	None (note 2)	2% (from 2008/09) (note 2)

Notes: 1. Type B car only. 2. Do not apply to QUALECs

FUEL BENEFIT CHARGE

Based on CO2 emissions. Charge to be multiplied by a set figure for the year.
From 2008/09 set figure is £16,900. From 2003/04 to 2007/08 set figure was £14,400.
Example: A car that has a CO2 emissions of 195 g/km. % used to calculate car benefit is 27% for 2008/09.
The fuel scale charge will be 27% x £16,900 = £4,563.
Cars registered before 1/1/98 and cars with no CO2 emissions figure. % figure to be used is the same as used for Car Benefits.

TAX FREE MILEAGE RATES - OWN TRANSPORT
Miles	2009/2010	2008/2009
up to 10,000 miles	40p	40p
over 10,000 miles	25p	25p

For each additional passenger 5p. Motor Cycles 24p. Bicycles 20p.

ADVISORY ONLY - TAX FREE MILEAGE RATES 2009/2010 - COMPANY CARS*
Cylinder Capacity	Petrol	Diesel	LPG
0 - 1400cc	10p	11p	7p
1401 - 2000cc	12p	11p	9p
2001cc +	17p	14p	12p

From the 1 January 2008 HMRC will review these twice a year 1 January and 1 July.

INDIVIDUAL SAVINGS ACCOUNTS (ISA's)

Individuals 18 or over, Maximum Investment of �7,200pa of which there is a maximum of £3,600 for a "cash ISA" and £1,000 for a "life insurance ISA"

Individuals 16-17 can invest up to £3,000pa in either the cash element of a maxi-ISA or in a cash mini-ISA

Individuals 50 or over, from 6 October 2009, Maximum Investment £10,200 (of which up to £5,100 can be saved in a cash ISA) From 2010/11 this will be the limit for everybody.

Income from this type of investment is free of any Income tax or Capital Gains Tax.

NATIONAL INSURANCE CONTRIBUTIONS 2009/2010 Class 1 - Employed
	Employee's Contribution			Employer's Contribution
Earnings in range	Contribution Table A	Contribution Table B	Contribution Table C	Tables A,B and C
Up to £110pw (£477pm)	Nil	Nil	Nil	Nil
£110.01 - £770pw (£3,337pm)	11%	9.4%	Nil	12.8%
£770.01 - £844pw (£3,657pm)	11%	11%	Nil	12.8%
Over £844pw	1%	1%	Nil	12.8%

The reduced rate payable by certain married women and widows will remain 4.85%, payable on earnings between £110.01 and £844, 1% above £844 per week.

Class 1A (employers only) : 12.8% based on taxable benefits excluding childcare
Class 1B (employers only) : 12.8% in respect of amounts in PAYE settlement agreement
Class 2 - self-employed flat rate: £2.40 per week if earnings are over £5,075 pa
Class 3 - Voluntary: £12.95 per week
Class 4* - Self-employed: 8% on profits between £5,715 and £43,875pa, 1% over £40,440pa
*Exemption applies if state retirement age was reached by 6 April 2009

PERSONAL PENSIONS (PPPs) and RETIREMENT ANNUITY PREMIUMS (RAPs)

The maximum amount of contributions on which an individual can claim tax relief in 2007/08 is the greater of

The "basic" amount - currently £3,600: and
The amount of the individual's relevant UK earnings that are chargeable to income tax for the tax year up to a maximum of £235,000.

In certain circumstances it may be possible to contribute more than above, but specialist advice should be sought.

A tax charge potentially arises if the value of the pension at retirement exceeds the lifetime allowance.

The pension scheme lifetime allowance for 2008/09 is £1,650,000

RATES OF INHERITANCE TAX
Transfers on or Within Seven Years Before Death
	2009/2010	2008/2009
Nil rate band to	£325,000	£312,000
Rate of tax on balance	40%	40%
Chargeable lifetime transfers	20%	20%

Main exemptions
Spouse/cival partner - both UK domiciled (or tranferor non domiciled): unlimited
Non domiciled spouse/cival partner - UK domiciled transferor: £55,000
Business property relief of 100% for all shareholdings in qualifying unquoted companies.
Similar relief for qualifying assets used in unincorporated businesses and working farms.
Annual exemption for chargeable lifetime transfers �3,000.
Small gifts - annual amount per donee �250.
Marriage gifts by
- parent: £5,000
- grandparent: £2,500
- other: £1,000

Charities and political parties: unlimited
Regular gifts out of surplus income are also exempt.

Reduced tax charge on transfers within 7 years of death

Years before death	% of death rates
0 - 3	100%
3 - 4	80%
4 - 5	60%
5 - 6	40%
6 - 7	20%
Over 7	NIL

CAPITAL GAINS TAX
Tax is charged at 18% after deduction of Annual Exemption. Entrepreneurs' Relief reduces the rate to 10% on the first £1m of gains on disposals of qualifying business assets.
Annual exemption	2009/2010	2008/2009
Individuals and personal reps	£10,100	£9,600
Trusts for diabled person	£10,100	£9,600
Most trusts	£5,050	£4,800
Chattels exemption - proceeds up to	£6,000	£6,000
Transfers between husband & wife living together	No Limit	No Limit

Companies: Gains charged to corporation tax after indexation, no annual exemption available.

CORPORATION TAX		Y/E 31/3/2010	Y/E 31/3/2009
Small companies' rate	up to £300,000	21%	21%
Upper marginal rate	£300,001 to 1,500,000	29.75%	29.75%
Full rate	Over £1,500,00	28%	28%

Companies with taxable profits of £1,500,000 or more may be liable to quarterly instalment payments on account of tax liabilitis.

MAIN CAPITAL ALLOWANCES

Plant and machinery

writing down allowance (some long life assets 6%)
Long life assets (including integral features)
Approved energy-savings items
Annual Investment Allowance
up to £50,000
over £50,000 (only if it would have qualified for WDA 20%)

Motor Cars (max relief £3,000pa)

General (reducing balance basis)
Low emission cars (less than 110co2)

New cars purchased after 1 April 2009 (Co) or 6 April 2009
Low emission cars (less than 110c02)
Cars less than 160 co2
Cars higher 160 co2
The max relief of £3,000pa will no longer apply

Other Items

Research & Development
Enterprize Zone buildings
Industrial buildings, hotels and agricultural buildings

2009/2010

20%
10%
100%

100%
40%

20%
100%

100%
20%
10%

100%
100%
3%

2008/2009

25%
6%
100%

100%
20%

20%
100%

N/A
N/A
N/A

100%
100%
3%

VALUE ADDED TAX
Standard rate (17.5% from 01/01/2010)	15%
Reduced rate	5%
Registration level from 01/05/2009	�68,000 pa
Deregistration level from 01/05/2009	�66,000 pa
Optional flat rate scheme - up to	£150,000
Annual accounting scheme - up to	£1,350,000
Cash Accounting Scheme	£1,350,000

VAT as a fraction of gross price - 7/47ths

VAT SCALE RATES ON PRIVATE FUEL (return periods starting after 01/05/2008)
Return Period	Monthly		Quarterly		Annual
CO2 band	Gross	VAT	Gross	VAT	Gross	Vat
120 or less	£42	£5.48	£126	£16.43	£505	£65.87
125	£63	£8.22	£189	£24.65	£755	£98.48
130	£63	£8.22	£189	£24.65	£755	£98.48
135	£63	£8.22	£189	£24.65	£755	£98.48
140	£67	£8.74	£201	£26.22	£805	£105.00
145	£71	£9.26	£214	£27.91	£855	£111.52
150	£75	£9.78	£226	£29.48	£905	£118.04
155	£79	£10.30	£239	£31.17	£960	£125.21
160	£83	£10.83	£251	£32.74	£1,010	£131.74
165	£88	£11.48	£264	£34.43	£1,060	£172.77
170	£92	£12.00	£276	£36.00	£1,110	£138.26
175	£96	£12.52	£289	£37.70	£1,160	£151.30
180	£100	£13.04	£302	£39.39	£1,210	£157.83
185	£104	£13.57	£314	£40.96	£1,260	£164.35
190	£109	£14.22	£327	£42.65	£1,310	£170.87
195	£113	£14.74	£339	£44.22	£1,360	£177.39
200	£117	£15.26	£352	£45.91	£1,410	£183.91
205	£121	£15.78	£365	£47.61	£1,465	£191.09
210	£126	£16.43	£378	£49.30	£1,515	£197.61
215	£130	£16.96	£390	£50.87	£1,565	£204.13
220	£134	£17.48	£403	£52.57	£1,615	£210.65
225	£138	£18.00	£416	£54.26	£1,665	£217.17
230	£142	£18.52	£428	£55.83	£1,715	£223.70
235 or more	£147	£19.17	£441	£57.52	£1,765	£230.22

OPTIONAL VAT FLAT RATE SCHEME FOR SMALL BUSINESSES
(HMCE Notice 733) Registration Allowed subject to certain exemptions, if expected turnover in the next 12 months is No more than £150,000 taxable supplies; once on the scheme the trader is not required to leave the scheme until his annual income exceeds £225,000. Calculate vat payable by multiplying the flat rate percentage for the relevant trade sector by total income. N.B. Supplies to other Vat registered businesses are invoiced at the normal rate for the supply
FLAT RATE PERCENTAGE BY TRADE SECTOR
Category of Business	%
Retail of food, confectionery, tobacco, newspapers or childrens' clothing	2.0
Membership organisation - Postal & Courier Services - Pubs - Wholesale food	5.5
Retail of goods not elsewhere listed - Wholesale of agricultural products - Agriculture not elsewhere listed	5.5
Retail of pharmaceuticals, medical goods, cosmetics or toiletries - Sport or recreation - Retail of Vehicles or fuel - Wholesale not elsewhere listed	6.0
Agriculture services - Library, achive, musem or other cultural activity - Manufacturing food - Printing - Repairing vehicles	7.0
Packaging - Building or construction services where materials supplied - Social work - Agricultural services - Hiring or renting goods - Manufacture of textiles or clothing - Other manufacture not elsewhere listed - Personal and household goods repair service	7.5
Forestry or fishing - Mining or quarrying - Transport or storage, including freight, removals and taxis - Travel agency	8.0
Advertising - Retail of machinery, equipment, personal or household goods - Waste and scap dealing - Hotel or accommodation - Photography - Publishing - Veterinary medicine -	8.5
Animal husbandry - Manufacture of fabricated metal products - Investigation or security - All other activity not elsewhere listed	8.5
Boarding or care of animals - Film, radio, television or video production	9.5
Estate agency or property management - Secretarial services - Entertainment, excluding television, video and film production - Laundry services - Business services not elsewhere listed -Computer repair services -	9.5
Financial services	10.5
Restaurants, takeaways or catering services - Hairdressing - Real estate activity not elsewhere listed	10.5
Management consultancy - Architects, cival & structural engineer	11.0
Accountancy and bookkeeping - Computer and IT consultancy or data processing - Building or construction services where primarily only labour supplied - Lawyers and legal services	11.5
Building or construction services where primarily only labour supplied	11.5

STAMP DUTY
Transfers by sale	% of Consideration
Shares and marketable securities	0.5%
Land and other property - Disadvantage Area £0 - �150,000 ( temporary increased to £175,000 until 31/12/2009) £150,001 - £250,000 £250.001 - £500,000 Over £500,000	Nil 1% 3% 4%
Land and other property - Residential £0 - �125,000 (temporary increased to £175,000 until 31/12/2009) £125,001 - £250,000 £250.001 - £500,000 Over £500,000	Nil 1% 3% 4%
Land and other property - Non-residential £0 - £150.000 £150,001 - £250,000 £250,001 - £500,000 Over £500,000	Nil 1% 3% 4%
Transfers by gift	NIL
Property that is not land, shares or interests in partnerships is no longer subject to stamp duty.
New Leases (lease duty) Charge for the rental element of leases is 1% on the net present value (NPV) of the rental payments to the extent that the NPV exceeds £125,000 for residential property of £150,000 for non-residential property. Lease premiums are charged at the same rates as for freehold transfers, unless the annual rent exceeds £600, in which case there will be no zero band for the premium and the 1% charging band will apply to premiums up to £250,000.

PENSIONS AND BENEFITS
Basic Retirement Pension Basic person On husband's insurance Addition at age 80 Value of graduated pension unit	Weekly Benefit
	2009/2010	2008/2009
	£95.25 £57.05 £0.25 0.1153	£90.70 £54.35 £0.25 0.1098
Child Benefit & Guardian's Allowance Child Benefit - eldest or only child - each other child Guardian's Allowance	£20.00 £13.20 £14.10	£18.80 £12.55 £13.45
Statutory Sick Pay (SSP) Earnings threshold Standard Rate	£95.00 £79.15	£90.00 £75.40
Maternity and Paternity Benefits Maternity Allowance - earnings threshold - standard rate Statutory Maternity, Paternity & Adoption - earnings threshold - standard rate	£30.00 £123.06 £95.00 £123.06	£30.00 £117.18 £90.00 £117.18
Carer's Allowance Standard Rate - spouse or person looking after children Earnings rule	£53.10 £31.70 £95.00	£50.55 £30.20 £95.00
Incapacity Benefit Long Term -spouse or person looking after children Short-term (under state pesion age) -lower rate -Higher rate - spouse or person looking after children	£89.80 £53.10 £67.75 £80.15 £41.35	£84.50 £50.55 £63.75 £75.40 £39.40
Bereavement Benefits Bereavement payment (lump sum) Widowed parent's allowance Bereavement allowance ( Standard rate)	£2,000.00 £95.25 £95.25	£2,000.00 £90.70 £90.70
Jobseekers allowance Age under 25 Age 25 and over	£50.95 £64.30	£47.95 £60.50

NATIONAL MINIMUM WAGE
Age	From 1 October 2009	From 1 October 2008
22 and above	£5.80	£5.73
18 - 21	£4.83	£4.77
16 - 17	£3.57	£3.53

Minimum Holidays 28 days ( 5.6 weeks) which can include statutory holidays

EARLIEST DUE DATES FOR PAYMENT OF TAX Income Tax
Employments	Under PAYE - withheld on payment. Balance - 31 January following end of tax year, or added to PAYE in later year.
All income received without tax deduction (trades, professions, rents and untaxed interest)	Payments on account on 31 January and 31 July based on 2008/09 tax Balance of 2008/09 tax due 31 January 2010
Dividends and most interest	10% withheld on payment. Higher rate due 31 January 2010 for 2008/09

Capital Gains Tax - 31 January following the end of the tax year

Inheritance Tax - normally 6 months after month of death

Corporation Tax - normally 9 months after end of accounting period

Disclaimer
The above information has been provided for guidance only and should not be taken as a substitute for professional advice. The writer cannot accept any liabilities for loss sustained in the use of the above information.