2010/2011 Tax Rates and Allowances

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Income tax
	2010/11	2009/10
Starting rate 10% (for savings income only)	£2,440	£2,440
Basic rate 20%	£37,400	£37,400
Higher rate 40%	£37,400-£150,000	£37,400+
Additional Higher rate 50%	£150,001+	N/A
Savings income rate		20%

Personal Allowances	2010/11	2009/10
Under 65 Tax	£6,475	£6,475
65 -75	£9,490	£9,490
75 & over	£9,640	£9,640

Pensions
Annual allowance Capped at	£245,000
Amounts exceeding annual allowance taxed at 40% (May be amended to incorporate 50% rate)
Tax relief given on:	100% of net relevant earnings or £3,600 if higher -Relief restricted to basic rate on a tapered basis when earnings are between £150,000 and £180,000 - Basic rate relief only given if earnings exceed £180,000
Lifetime limit	£1,750,000
'Amounts exceeding lifetime limit taxed at 55% is extracted as a lump sum or 25% if not

Inheritance Tax
Exempt transfers:
Gifts to UK domiciled spouse
Gifts to charity
Overseas domiciled spouse up to £55,000
Annual exemption £3,000
Small gifts £250
Wedding gifts - £5000 child, £2500 grandchild or remoter issue, £1000 other
Non UK assets held by a non domiciled individual

Rate of tax at death	40%
Nil rate band: £325,000 (09/10 also £325,000)

Lifetime tax rate		20%
No tax on transfers to individuals unless death within 7 years

Reduced tax charge on gifts made when death is within 7 years
Years: 0-3 3-4 4-5 5-6 6-7
% taxable 100 80 60 40 20

Capital Gains Tax

2010/11

2009/10

Individual Exemption

£10,100

Chattels Exemption

£6,000

Trusts exemption

£5,050

Rate of charge

18%

Entrepreneurs relief - 10% effective tax rate on the first £1,000,000 of relevant business assets gain

Transfers between husband and wife living together are exempt.

Corporation Tax

Year commencing

1st April 09 & 2010

Profits

Small Co. rate

£0- £300,000

21%

Marginal rate

£300,001- £1,500,000

29.75%

Main rate

£1,501,000+

28%

NB: Associated companies reduce band levels

Main Capital Allowances

Annual Investment Allowance(AIA) - 100% on the first £50,000 of expenditure (excluding cars)

Existing Motor Cars- 25% of reducing balance. Max of 3,000 per car

New Cars - 10% reducing balance if CO2 exceeds 160g/km, 20% if below this

Plant & Machinery -20% of reducing balance

Industrial Buildings - Effective rate 2% of cost

Computer Equipment - 20% of reducing balance

Goodwill - 4% amortisation

Intergral features - 10%

Enhanced first year allowances - 40% on expenditure exceeding the AIA limit

* There will no longer be separate pools - all assets will go into the 'General' or the 'Integral Features' Pool

Value Added Tax

Standard Rate

Standard Rate

From 1st Jan 10

From 1st January 2010

17.50%

Up to 31st December 2009

15%

VAT fraction (from 1/1/10)

7/47

(To 31/12/09)

3/23

Registration- Turnover greater than £68,000

De-Registration- Turnover less than £66,000

Cash accounting scheme

De-register when turnover greater than £1.6 million

Annual Accounting scheme - turnover less than £1.35 million

Flat rate scheme limit: £150,000

VAT Scale Charge: Now based upon the CO2 Emissions of the vehicle concerned

Vehicle Benefits
Chargeable on employees and directors earning £8,500 or over (including benefits)
Car Benefit: This is calculated as a percentage of the original list price of the vehicle.
Car fuel benefit:This is now calculated as a percentage of a fixed sum of £18,000.
The percentage used for both the car benefit and car fuel benefit will be dependent on the level of CO2 vehicle emissions
Van benefit per vehicle:£3,000 if there is any private use. Travel between home and work is no longer considered private use
Van Fuel Benefit: £550
Mileage Allowances
The maximum tax-free mileage allowances for employees using their own cars for business are as follows:
2008/09 & 2009/10	First 10,000 Miles	10,000+ miles
Car & Van	40p	25p
Motorcycle	24p	24p
Bicycle	20p	20p
Notes: 1.Payments in excess of approved rates- excess is taxable
2.Payments at less than approved rates- employees can claim tax relief for shortfall.
NI Contributions
2009/2010
Class 1	Employer	Employee
Weekly earnings
	% of all earnings

£0- £110	NIL	NIL
£110- £844	12.80%	11%
Over £844	12.80%	1%
The above rates apply to those not contracted out of SERPS.

Class 1A	Employer	12.80%
Class 2*	S/Employed	£2.40 per wk
Class 3	Voluntary	£12.05
Class 4	S/Employed
£0-£5,715		0%
£5,715- £43,875		8%
Over £43,875		1%
* Payable on net earnings over £5,075 (08/09 £4,825)
This document is for information only; A4G Accounting LLP cannot be held responsible for the accuracy of information contained or for the outcome of any action taken based on the information contained within this document.