Pre Budget Report 24 Nov 08

Of particular interest to members will be the following:

Small companies' rate of corporation tax: The Government is deferring for one year the planned increase in the small companies' rate of corporation tax. The rate will remain at 21 per cent during 2009-10.

Empty Property Rate Relief: The Government is temporarily increasing the threshold at which an empty property becomes liable for business rates. For financial year 2009-10 empty properties with a rateable value of less than £15,000 will be exempt from business rates – exempting an estimated 70 per cent of empty properties.

Interest-free payment schedule for backdated business rates bills: To reduce the cash flow impact on businesses, given current economic difficulties, the Government will legislate to give more time to pay certain backdated business rates bills issued before 31 March 2010. Business facing such bills will be able to pay their liability for previous years in equal interest-free installments over 8 years, rather than immediately. Beneficiaries will include several occupiers of ports who have been affected by recent rating reviews.

Personal tax and National Insurance Contributions: This Pre-Budget Report makes permanent the £600 increase in the personal allowance and the £1,200 reduction in the basic rate limit announced in May, and announces further reforms to personal tax. These changes will provide additional help for low to middle income families next year. In April 2009, the Government will increase the personal allowance by £130 above indexation. This is on top of the £600 increase for 2008-09. It means 22 million basic rate tax payers under 65 will pay £145 less tax in real terms in 2009-10.

Value Added Tax (VAT): There will be a temporary reduction in the standard rate of VAT to 15% from 1 December 2008 until 31 December 2009 as part of a fiscal stimulus.

Income tax rates and allowances: The main rates of income tax for 2009/10 will remain at 20% for basic rate taxpayers and 40% for higher-rate taxpayers. The age related allowance has been raised in line with inflation to £9,490 for people aged between 65 and 74 and to £9,640 for those aged 75 and over. This will mean that in 2009-10 no one aged 65 or over need pay tax on an income of up to £182 a week.

BERR (Better Regulation agenda) is aware that the changes to VAT will come into affect very shortly. This has been done in order to stimulate growth, but they are aware that some retailers may not be in a position to accommodate this change immediately. HM Treasury has stated that it will be flexible in the way in which retailers introduce the changes – as long as the overall cut is passed on to consumers.

Attachments:

• Pre Budget report 241108.pdf