Alastair Darling delivered his final Pre-Budget Report before the general election earlier today with some significant changes being announced in employment tax. In summary the main headlines are:
• A one off levy of 50% on individual bank bonuses of over £25k for the period from the Pre Budget Report to 5 April 2010.
• A further increase of 0.5% to be the National Insurance rates for employees, employers and the self-employed from April 2011. However, those earning less than £20k will be protected from this latest increase.
• Confirmation of the restriction of pensions tax relief from April 2011 to those with gross incomes over £150k where the gross income incorporates all pension contributions, including those funded by the employer.
• For 2010-11, the basic and higher tax rates will remain the same, as well as the personal allowance and basic rate limit.
• Freeze on higher rate income tax threshold in 2012-13
• Child benefit and disability benefit to be increased by 1.5% in April 2010 with state pension being increased by 2.5% in April 2010
• No further changes in VAT and a return to the 17.5% rate on 1 January 2010
• For company car tax, the 10% band for cars that emit less than 120g CO2/km is to be reduced to 99g CO2/km from April 2012, with benefit tax abolished for the next five years on electrically-propelled cars and vans.
• The fuel scale charge levied on company car drivers receiving private fuel will see the multiplier increase from £16,900 to £18,000 in April 2010, with van fuel benefit increasing from £500 to £550 on the same date.
• The Government will legislate to restrict the tax exemption for workplace canteens from April 2011 by removing the exemption when used in conjunction with salary sacrifice or flexible benefit arrangements.
A more comprehensive summary will follow, but if you do have any questions in the meantime, please contact us on tax@pesconsulting.co.uk
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