The Budget and the Finance Bill 2009

Following on from the Pre-Budget Report, the Budget was published on 22 April 2009. Aside from those changes mentioned in the ECA January/February issue, the following were announced:

Individual inheritance tax allowance has risen from £312,000 to £325,000.
As of 6 April 2009, an additional higher rate of income tax of 50 per cent is applicable to taxable savings and non-savings income (other than dividends) above £150,000.
An additional level of tax on dividends will also be implemented in line with the new 50 per cent rate. Dividends that would otherwise be taxable at the 50 per cent rate will be taxable at a new 42.5 per cent dividend rate.
The dividend trust rate will be increased from 32.5 per cent to 42.5 per cent and the trust rate will be increased from 40 per cent to 50 per cent.
From 6 April 2010, the income tax rate for UK resident discretionary trusts is to be increased to 50% on income above £1,000.
New powers of HMRC are also to be introduced, including a penalty charge for carelessly or deliberately providing inaccurate information or a document that contains an inaccuracy and new inspection and information powers including a modernised HMRC valuation power.

The Finance Bill 2009 was published on 30 April 2009, enacting many of the Budget measures, and the second reading of the Finance Bill was held on 6 May 2009. Details of the Bill are available at www.parliament.uk

It has also just been announced that VAT is set to rise again to 17.5% on 31 December 2009.

Legislation will be introduced to prevent artificial securing of the 15% rate through pre-invoicing for services post 1 January 2010.