Budget 2010 - tax changes

Below are details of the more relevant changes in tax rates and thresholds as announced by Mr Darling in today’s 2010 Budget.  Changes are effective from 1 April 2010 for companies and 6 April 2010 for individuals unless stated otherwise.  Further details can be found on the HMRC website.

Surprisingly there were no increases announced (for now) to the rate of VAT or capital gains tax although we think this is more to do with the forthcoming General Election than the economic state of the country.

Income tax

A new rate of 50% introduced for earnings in excess of £150k pa (the equivalent effective rate for dividends increases from 25% to 36.1%).

The personal allowance is withdrawn at the rate of £1 for every £2 of earnings in excess of £100k pa.

Company tax

Previously announced increase in small company rate to 22% is deferred (again) until April 2011.

NIC

No changes this year but a general 1% increase is planned from April 2011.

VAT

Registration threshold increases to £70k pa.

Stamp duty

A temporary SDLT exemption for first time buyers of residential property valued up to £250k.  The exemption applies for transactions between 25 March 2010 and 25 March 2012.

A new 5% SDLT rate for residential properties purchased for over £1m with effect from April 2011.

Pensions

The annual allowance increases to £255k while the lifetime allowance increases to £1.8m.

Other

Annual investment allowance for the purchase of capital assets is doubled to £100k.

Special tax rules for Furnished Holiday Lets are withdrawn (previously announced).

ISA allowance increases to £10,200 (up to 50% can be saved as cash).

Entrepreneurs lifetime limit for capital gains is doubled to £2m.