Pre Budget report 2009

Below is a summary of the key points of Alistair Darling's Pre-Budget Report

National Insurance :

There will be an increase of 0.5% in the NIC rates payable by employees, employers and the self-employed in addition to the 0.5% increase already stated in the 2008 PBR.

There will also be an increase to the primary threshold and lower profits limit of £570 above those already planned in the 2008 PBR. This is to compensate lower earners for the proposed increase to the rates of Class 1 and Class 4 NIC.

The main rate of Class 1 primary NIC will be 12%, with a rate of 2% payable on earnings above the upper earnings limit. The main rate of Class 1 secondary NIC will increase to 13.8% (rather than the 13.3% previously announced) on earnings above the secondary threshold. The increase will also apply to Class 1A and Class 1B NIC
rates.

From April 2011, the main rate of Class 4 NIC will increase to 9%, with a rate of 2% payable on profits above the upper profits limit.

This should raise an additional £7 billion per annum from 2011, much needed to cover government debt.

Company Cars and Vans

Company cars: downwards revision of company car tax bands

The table of company car tax bands will be restructured from 6 April 2012 such that the 10% band applies to petrol company cars with CO2 emissions of 99g/km and below. The bands increase at 1% intervals for each additional 5g/km of CO2. The 3% diesel supplement still applies. Qualifying Low Emission Cars (QUALECs) will therefore no longer exist as a separate category.

Company cars and vans: tax on receipt of free private fuel : the figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company car is to be increased from £16,900 to £18,000 from 6 April 2010. The figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company van is to be increased from £500 to £550.

Electric company cars and vans: zero tax on benefit of private use

The percentage figure used to calculate the benefit in kind of an electric car/van will be reduced to 0% for five years from 6 April 2010. This is effectively a tax free benefit. Electric vans: 100% first-year capital allowances

Subject to confirming compatibility with the State aid rules, legislation will beintroduced to provide a 100% first-year allowance for business expenditure on new (not second hand) electric vans from 1 April 2010 (corporation tax) or 6 April 2010(income tax).

Note: where the term "electric" is used above, this is intended to describe a vehicle which is propelled solely by electricity and is not a hybrid.


VAT

VAT will revert to 17.5% on 1st January 2010

Stamp Duty

Stamp duty will revert to normal threshholds from 1 January 2010, ie : the minimum threshhold will increase to £175,000

Green Measure

A scrappage support scheme has been announced for old domestic boilers.

Public Sector Pay

This has been limited to no more than 1.0% increase per annum.

Bank Bonuses

Plans were unveiled to tax Bank bonuses in a one-off windfall tax of 50% for bonuses in excess of £25,000.

[Observers suspect this will prove to be totally ineffective as the banks will simply find a way round this. There's an email going round the City already which says : "Take a step back. This was designed by a f***wit
in about 2 weeks. They have given the finest brains in world finance 6
months to find a way around it. Doesn't really seem a fair battle does
it?"].

Summary - This Pre-Budget Report is light in susbtance and contained few surprises, typical in the run up to a General Election.