December 2009

December 2009 – Pre-Budget Report

National Insurance

From April 2011, the Chancellor announced that national insurance rates will increase by 1%, an increase of 0.5% on what had previously announced.  As a result of this, the main rate of Class 1 and Class 4 will increase to 12% and 9% respectively, while the additional rates will both increase to 2%.

Class 1 secondary (i.e. Employers NI), Class 1A and Class 1B  will increase to 13.8%

Corporation Tax

It was announced that the small companies’ rate increase from 21% to 22% due to take effect from April 2010 will be deferred for a further year.  The Chancellor also mentioned that the current business payment support arrangements will be extended indefinitely.

VAT

Although there were suggestions to the contrary, the chancellor announced the the increase to 17.5% from 1 January 2010 will remain.

There have also been several changes made to VAT legislation regarding services to and from other EEA member states.  The rules are more straightforward than previously, however, the disclosure that each company may need to make is increased.

Companies who sell goods to other member states currently have to fill in EC Sales Lists on a calendar quarter basis.  From 1 January 2010, companies will also have to file ESLs for services.  It is still possible to submit these quarterly, but if the value of intra-community trade exceeds £70,000 in the current quarter, or any of the previous four quarters, the ESLs must be submitted monthly.

Pensions

The Chancellor announced various further restrictions on higher rate tax relief on pension contributions.  These appear highly complicated and would effects individuals differently.  Please contact us if you would like further information about these restrictions.