The standard rate of VAT is reduced from 17.5% to 15% on 1 December 2008. This is a temporary reduction until 1 January 2010 when the rate will revert to 17.5%.
This should reduce the price of VATable goods and services that you buy. However this will only happen if the businesses who sell these goods and services pass on the 2.5% saving.
If the savings are passed on, it will reduce the cash cost (inc VAT) of a £50 VATable purchase to £48.94.
Personal Allowance 2009-10
From the 6 April 2009 the income tax personal and age related allowances are increased to:
- Age under 65 - £6,475
- Age 65 to 74 - £9,490
- Age 75 and over - £9,640
The income limit for aged related allowances (over 65's) is increased to £22,900.
Blind person's allowance increased to £1,890.
Personal Allowance 2010-11
The personal allowance will be reduced for individuals with gross incomes, before personal allowances, above £100,000 and further reduced for gross income above £140,000. This measure will progressively reduce the personal allowance available to these high income groups. It will also produce a marginal rate of tax of 60%.
Income Tax Rates 2009-10, taxable bands
- Starting savings rate 10%* - £0 to £2,440
- Basic rate 20% - £0 to £37,400
- Higher rate 40% - Over £37,400
* There is a 10p starting rate for savings only. If an individual’s non savings taxable income exceeds the starting rate limit, the 10p starting rate for savings will not be available for savings income.
Income Tax Rates 2011-12
A new tax rate of 45% is to be introduced on income over £150,000.
A new 37.5% rate of tax will apply to taxable dividend income above £150,000
National Insurance changes 2009-2010
- Class 1 contributions: Lower earnings limit increased to £95 per week, the primary threshold increased to £110 per week, and the upper earnings limit increased to £844 per week. No change to NIC rates.
- Class 2 contributions: Increase in weekly rate to £2.40; small earnings income exemption increased to £5,075
- Class 3 rate: Increased to £12.05 per week.
- Class 4 rates: Rates unchanged; lower profits limit increased to £5,715 per year; upper profits limit increased to £43,875 per year.
Note: The number of qualifying years required to receive a full State Pension falls from 44 for a man and 39 for a woman to 30 for both men and women from 6 April 2010.
National Insurance changes 2011-2012
Class 1 and Class 4 NIC's to be increased by 0.5%. Both employers and employees rates will be affected.
Increases due from April 2009 have been brought forward to 5th January 2009. The new rates are:
- Eldest or only child £20 per week
- Other children £13.20 per week
Pensions tax relief 2009-10
Annual allowance increased to £245,000
Lifetime Allowance increased to £1.75m
From 1 December 2008 the main fuel duty will increase by 2 pence per litre. The reduction in the standard rate of VAT to 15% should compensate for this increase.
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