Income tax – the personal allowance remains at £6475 (£124.52 per week). The next £37400 will be taxed at 20%; then 40% for income between £43875 and £100000. Above £100000, the personal allowance will reduce by £1 for each £2 of income, creating an effective 60% tax rate on earnings between £100000 and £112950. At £150000, income tax increases to 50%. The personal allowance for 65-74’s remains at £9490, and for age 75 and over it remains at £9640.
Corporation tax – the small companies rate (first £300k of profit) remains at 21% for the year commencing 1.4.10.
National Insurance – self employment – class 2’s remain at £2.40 per week, class 4’s are 8% of profits between £5715 and £43875, and 1% above £43875. For employees – 11% of earnings between £110 and £844 per week, and 1% above £844. Employers – 12.8% on all earnings above £110 per week.
VAT – registration limit increases from £68000 to £70000 from 1.4.10.
Capital allowances – the first £100k of capital expenditure excluding cars in 2010/11 will qualify for 100% tax relief in year one. Cars – as last year, allowances depend on their CO2 emissions – 100% if not more than 110g/km, 20% for 110 to 160g/km, 10% if over 160g/km. Vans are 100% providing that the value falls within the annual £100k allowance.
Capital gains tax – the annual allowance for individuals ( not companies) remains at £10100. The 18% flat rate of tax continues into 2010/11. The entrepreneurs limit for lifetime gains (at 10% tax) increases from £1m to £2m.
Inheritance tax – the nil rate band remains at £325000 for 2010/11 (£650000 for married couples and civil partners).
Furnished holiday lettings – the special rules which allowed losses to be offset against other income will be withdrawn from 6.4.10.
