SUMMARY OF THE PRE-BUDGET REPORT

Pre-Budget Report - 2008
The following is a brief summary of the main proposals in the Chancellor of the Exchequers Pre-Budget Report.

Income Tax Rates allowances / limits and National Insurance contribution rates / thresholds
Over the next 3 years, the Government plans to introduce a top level tax rate of 45%.  This will apply to individuals with incomes above £150,000 per annum. 

In the financial year 2009/2010, the basic personal allowance will increase to: £6,475.  For individuals earning more than £100,000, the personal allowance will reduce and will reduce further for those earning above £140,000.  These changes will be introduced from 6th April 2010.

Changes to the standard rate of VAT
As you will probably know, the standard rate of VAT reduced from 17.5% to 15% from 1st December 2008.  This will apply until the 1st January 2010 when it will revert to 17.5%.

Corporation Tax – Small Company’s Rate
The planned increase of the small company’s rate of corporation tax from 21% to 22% from 1st April 2009 has been deferred until 1st April 2010.

Pension Schemes – Lifetime Allowance
The lifetime allowance will increase to £1.8 million in 2010/2011.  The annual allowance will increase to £255,000 in the same year.

Summary
The Pre-Budget Report adds more complexity to an already complex tax system.  Our view is that clients should remember that these are proposals and there maybe alternations both financial and political along the way.