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					       BARNES ROFFE LLP

          BUDGET SEMINAR 2009

      SINGLEWELL MANOR HOTEL

              23 APRIL 2009



BARNES ROFFE LLP                     2009
                              BUDGET 2006
       BARNES ROFFE LLP


              KEITH MASON
               BSc FCA ATII
                  Partner




BARNES ROFFE LLP                     2009
                              BUDGET 2006
     ECONOMIC BACKDROP
 • Most serious global economic turmoil for
   over 60 years!
 • Won’t repeat the 1930’s inadequate
   response.
 • Predict contraction in world economy for
   the first time since World War II.
 • … but world economy to double in the next
   20 years.

BARNES ROFFE LLP                        2009
                                 BUDGET 2006
     ECONOMIC BACKDROP
 • UK exports down 14% (Germany 21%, China
   26%, Japan 45%).
 • G20 fiscal support globally at £5 tn
 • We began the recession with all time high
   employment & low inflation, public debt and
   interest rates.
 • 2009 – fiscal easing @ 0.5% GDP in 2009,
   followed by tightening @ 0.8% GDP.
 • Tax rate – 1.2% as proportion of GDP compared
   with a year ago.


BARNES ROFFE LLP                           2009
                                    BUDGET 2006
      ECONOMIC BACKDROP
 • Inflation projected to fall to 1% in 2009. (last year
   predicted 2% in 2009!) (target still 2%)
 • RPI (-0.4%) to fall to -3% by September 2010
   (CPI Stubborn @ 3%)
 • In final Qtr 2008 – output fell by 1.6%. Similar
   expected in first Qtr 2009.
 • Contraction of 3.5% forecast in 2009.
 • Growth of 1.75% forecast in 2010
 • Growth of 3.5% pa from 2011, then to a trend rate
   of 2.75%.

BARNES ROFFE LLP                                2009
                                         BUDGET 2006
     ECONOMIC BACKDROP
 • At Budget 2008: 2010 growth forecast ~
   2.5% to 3.0%
 • Unemployment @ 4.5% (Up 137,000 in
   February, 74,000 in March).




BARNES ROFFE LLP                        2009
                                 BUDGET 2006
      ECONOMIC BACKDROP
 • 2008 Observations:-
 • Balanced budget (+£8bn over this economic cycle ~ 1st
   Golden Rule).
 • Current budget deficit - £8bn and then -£10bn (2008), -
   £4bn (2009), then in surplus of £4bn (2010), £11bn (2011),
   £18bn (2012)
 • Borrowing forecast at £36bn for 2008. Rising to £43bn in
   2009, falling to £23bn in 2013 (2.4% National income,
   rising to 2.9%, falling to 1.3%).
 • National debt @ 36.6% of national income (2007:
   38.2%). {1997: 44%}.


BARNES ROFFE LLP                                   2009
                                            BUDGET 2006
     ECONOMIC BACKDROP
 • At Budget 2008:- Borrowing projected to
   rise to 39.7% over next four years - 40% is
   limit per 2nd Golden rule
 • Public sector employment falling, private
   sector rising at Budget 2008.




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
     ECONOMIC BACKDROP
 • 2009 Projections:-
 • Borrowing forecast at £175bn for 2009. Then
   £173bn,£140bn, £18bn & £97bn (11.9% national
   income falling to 5.5% in 2013/14).
 • National debt @ 59% of national income, rising to
   68%, 74%, 78% & 79% but stabilising and
   beginning to fall in 2015/16. (1997: 44%!!)



BARNES ROFFE LLP                             2009
                                      BUDGET 2006
            BUDGET 2007



          The Irrelevant Budget




BARNES ROFFE LLP                   2009
                            BUDGET 2006
            BUDGET 2007


    ‘I did maths for a year at university. I
     don’t think I was very good at it. And
        some people would say it shows’
               (Gordon Brown)



BARNES ROFFE LLP                         2009
                                  BUDGET 2006
           KEY FEATURES
 • Income Shifting rules delayed beyond FA 2009 in
   2008 Pre Budget Report, but to be kept under
   review.
 • Naming & shaming for tax avoiders (> £25,00 tax)
   – projected to raise £60m pa – a cultural
   revolution!
 • Extended support for jobseekers. Guaranteed
   job/training/work placement for 18-24 year olds
   unemployed for 12 months or more.
 • Extension of 3 year loss carry back to 2010.

BARNES ROFFE LLP                            2009
                                     BUDGET 2006
             KEY FEATURES
 • FYA 2009/10 @ 40% for main pool qualifying additions.
 • ISA limit up to £10,200 (£5,100 in cash)
 • SDLT holiday up to £175,000 (residential) extended to the
   end of the year.
 • 2011/12 Highest tax rate increases (to 45%) brought
   forward to 2010/11 and increased to 50%.
 • Withdrawal of higher rate pension relief for income tax
   where earnings exceed £150,000 (down to 20% where
   income exceeds £180,000) (& measures to combat high
   contributions before effective date of April 2011).



BARNES ROFFE LLP                                   2009
                                            BUDGET 2006
           KEY FEATURES
 • Public spending growth (1.1% pa) to reduce to
   0.7% by 2013/14 (worse than opposition 2005
   manifesto pledges (BBC)).
 • £750,000 strategic investment fund (£250,000 for
   low carbon investments)
 • Help for recovery of UK oil/gas reserves (+ 2bn
   barrels).
 • Savings disregard for pension credit increased
   from £6,000 to £10,000.


BARNES ROFFE LLP                             2009
                                      BUDGET 2006
           KEY FEATURES
 • £600m fund for stalled housing developments.
 • Public spending efficiency savings - £156m
   identified.
 • 2011 - £80,000 company car cap abolished.
 • VAT @ 15% to 01.01.10 remaining the case.
 • Car scrappage scheme - £2,000 discount on trade
   in of a car > 10 years old (until March 2010).



BARNES ROFFE LLP                             2009
                                      BUDGET 2006
     Pre Budget Report ~ Misc.
 • New Rates of Air Passenger Duty




BARNES ROFFE LLP                       2009
                                BUDGET 2006
   Air Passenger Duty ~ 2008/09
 Passenger Type    Lowest Class Other
                   (reduced rate)    (standard rate)


 Destination:      £10               £20
 EEA area +
 Switzerland
 Destination:      £40               £40
 Other


BARNES ROFFE LLP                           2009
                                    BUDGET 2006
    Air Passenger Duty ~ Future
 Band / Distance   Lowest Class     Other
                   2009/10 2010/11 2009/10 2010/11

 A (0 – 2000)      £11     £12      £22     £24
 B (2001 – 4000)   £45     £60      £90     £120
 C (4001 – 6000)   £50     £75      £100    £150
 D (6001 +)        £55     £85      £110    £170

BARNES ROFFE LLP                            2009
                                     BUDGET 2006
      Pre Budget Report ~ Misc.
 • Trading loss carry back extension:
 • Corporation tax ~ CAP ending in period 24.11.08
   to 23.11.09 (extended to 23.11.10)
 • Income tax ~ Tax year 2008/09 (extended to
   2009/10)
 • After one year carry back, a further £50,000 may
   be carried back a further 2 years.
 • Two amounts of £50,000 available but not an
   aggregate of £100,000 if available amount in
   either is less than £50,000.


BARNES ROFFE LLP                             2009
                                      BUDGET 2006
     Pre Budget Report ~ Misc.
 • Corporation tax ~ Loan relationship rules
 • Connected companies ~ write off not
   allowed in debtor company, and no taxable
   amount in creditor company.
 • Previously certain trade balance write offs
   could give an unequal result, taxing creditor
   company.
 • Late interest rules largely abolished.

BARNES ROFFE LLP                          2009
                                   BUDGET 2006
     Pre Budget Report ~ Misc.
 Pension Schemes:-
 • Lifetime Allowance rises to £1.8m in
   2010/11.
 • Annual Allowance rises to £255,000 in
   2010/11.
 • Frozen up to and including 2015/16.



BARNES ROFFE LLP                        2009
                                 BUDGET 2006
     Pre Budget Report ~ Misc.
 • HMRC Business Payment Support Service
   ~ arrange affordable tax payment schedule.
 • 150% Corporation tax relief on brown-field
   land remediation extended to land derelict
   since 1.4.1998, and clearance of Japanese
   Knotweed.
 • Can’t have caused it yourself!


BARNES ROFFE LLP                        2009
                                 BUDGET 2006
    Pre Budget Report + ~ Misc.
 • Up to £5,000 subsidy on acquisition of electric /
   hybrid cars.
 • £2,000 “scrappage” allowance on cars more than
   10 years old.
 • Extension on relief from tax on foreign dividends.
 • VAT reduced from 17.5% to 15% between
   1.12.08 and 1.1.10.
 • VAT retail scheme t/o limit up from £100m to
   £130m.


BARNES ROFFE LLP                              2009
                                       BUDGET 2006
    Pre Budget Report + ~ Misc.
 • All rates of NIC up 1/2 % from 6th April 2011.
 • From 6th April 2010 income tax at 50% on income
   over £150,000 (42.5% on dividends increases
   effective rate on net from 25% to 36.11%).
 • Personal allowance reduced on incomes over
   £100,000 from 6th April 2010 @ £1 per £2 of
   income, down to nil (small band with 60%
   effective rate!)


BARNES ROFFE LLP                            2009
                                     BUDGET 2006
    Pre Budget Report + ~ Misc.
 • Current regime (from April 2008!):
 • No AIA (100% FYA on cars with low
   emissions {110g/km}).
 • WDA 20% (was 25%)
 • WDA restricted to £3,000 on cars costing
   over £15,000 (was £12,000), and all cars
   costing over £12,000 in own pool, else main
   pool (unless private use ~ non companies)

BARNES ROFFE LLP                         2009
                                  BUDGET 2006
      Pre Budget Report + ~ Misc.
 •   New regime (from April 2009):
 •   Cars emitting > 160g/km ~ 10% pool
 •   Other cars ~ 20% pool
 •   Cars with private use ~ single asset pool
 •   Motorcycles ~ main pool for AIA.
 •   From 1st/6th April 2009 ~ FYA @ 40% on
     main rate pool expenditure.

BARNES ROFFE LLP                           2009
                                    BUDGET 2006
    Pre Budget Report + ~ Misc.
 • Leased Cars
 • Currently disallow:-
   P x (OMV – 12000)/2 x OMV
 • P is premium, excluding maintenance.
 • New regime is a flat rate disallowance of
   15% x P if car emits > 160g/km.
 • Old regime continues for old leases.

BARNES ROFFE LLP                          2009
                                   BUDGET 2006
  Pre Budget Report ~ Reminder.
 • ITSA de minimis for payments on account
   increased from £500 to £1,000 total IT
   liability.
 • Operative after 6.4.09 (i.e. for 09/10) and
   first POAs affected will be on 31st January
   2010 and 31st July 2010.
 • Announced PBR 2008


BARNES ROFFE LLP                          2009
                                   BUDGET 2006
             INCOME TAX
 • 10% band abolished from 2008/09
 • Basic rate reduced from 22% to 20% from
   2008/09.
 • Higher rate threshold : £37,400 for 2009/10
   (£34,800 in 2008/09).
 • From 2010/11 incomes over £100,000, personal
   allowance reduced by £1 for each £2 income, until
   nil.
 • From 2010/11, income > £150,000 ~ tax rate 50%.
BARNES ROFFE LLP                             2009
                                      BUDGET 2006
   Income Tax Bands ~ 2010/11
    Income (Approx)                    Rate
       £0 - £6,000                      0%
     £6,000 - £40,000                  20%
   £40,000 - £100,000                  40%
   £100,000 - £112,000                 60%
   £112,000 - £150,000                 40%
        >£150,000                      50%
      *Dividend rate at 42.5%, trust rate at 50%

BARNES ROFFE LLP                              2009
                                       BUDGET 2006
  INCOME TAX ~ PENSIONS
 • From 2010/11 higher rate relief to be withdrawn.
 • Begins @ income > £150,000.
 • Relief tapered down to 20% by incomes @
   £180,000.
 • Anti forestalling provisions operative
   immediately.




BARNES ROFFE LLP                             2009
                                      BUDGET 2006
     INCOME TAX ~ MISC
 • Tax credits on foreign dividends available
   to individuals with immediate effect (10% +
   holdings).
 • Non residents entitled to allowances only by
   merit of being commonwealth citizens to
   lose entitlement from 06.04.10.



BARNES ROFFE LLP                         2009
                                  BUDGET 2006
      INCOME TAX ~ MISC
 • Anti avoidance to prevent avoiding living
   accommodation BIK on rented property by
   substituting rent with upfront “premium” and
   peppercorn rent.
 • Enhanced 100% CA’s (income & corporation tax)
   extended to uninterruptible power supplies, air to
   water heat pumps and close control air
   conditioning systems.


BARNES ROFFE LLP                              2009
                                       BUDGET 2006
             INCOME TAX
                           2008/09   2009/10
  •   Personal Allowance        6035   6475
  •   Personal Allowance(old) 9030     9490
  •   Personal Allowance(v.old) 9180   9640
  •   Married Couple’s All’ce*     0      0
  •      “       “      “ (old) 6625   6965
  •   *Rate of Relief            10%    10%

BARNES ROFFE LLP                        2009
                                 BUDGET 2006
            INCOME TAX
                          2008/09     2009/10
   • Income               £50,000      £50,000
   • Personal Allowance    (6,035)     (6,475)
   • Taxable               43,965      43,525
   • Chargeable @ :-
                     - 20% 34,800      37,400
                     - 40% 9,165        6,125
   • Tax Due              £10,626      £9,930



BARNES ROFFE LLP                            2009
                                     BUDGET 2006
               INCOME TAX
 •   2008/09 Taxable Income:-
     - 10% band abolished (unless non saving income
      below £2,320 in which case can get £2,320 for savings)

     - First £34,800       taxable @                  20%
     - Balance             taxable @                  40%




BARNES ROFFE LLP                                         2009
                                                  BUDGET 2006
               INCOME TAX
 •   2009/10 Taxable Income:-
     - 10% band abolished (unless non saving income
      below £2,440 in which case can get £2,440 for savings)

     - First £37,400       taxable @                  20%
     - Balance             taxable @                  40%




BARNES ROFFE LLP                                         2009
                                                  BUDGET 2006
            INCOME TAX
   • Child tax credits et al (commenced 2003).
   • Abatement of credits based on 39%
     income over prescribed limit.
   • Payment of pension contribution can
     reduce abatement of credit entitlement by
     39% x £Contribution.
   • Personal tax relief at (up to) 40%.
   • That’s 79% relief altogether.


BARNES ROFFE LLP                          2009
                                   BUDGET 2006
             INCOME TAX
   • Childcare: In-house nursery provision is
     tax/NIC exempt.
   • From 6.04.05 this has applied to direct
     provision of external care &/or vouchers
     where contract is with employer.
   • Need registered carer, available to all staff.
   • £55 per week limit from 6.4.06. No details
     of changes from 6.4.09.


BARNES ROFFE LLP                              2009
                                       BUDGET 2006
          NATIONAL INSURANCE
              (EMPLOYEES)

 • 2008/09
     - 1st £105 per week    0%
     - next £665 per week   11%
     - thereafter           1%
 • 2009/10
     - 1st £110 per week    0%
     - next £734 per week   11%
     - thereafter           1%
BARNES ROFFE LLP                   2009
                            BUDGET 2006
          NATIONAL INSURANCE
           (EMPLOYERS) (CONT)
 • 2008/09
   - charged at 12.8% on “earnings” above
   £105 per week and nearly all taxable
   benefits
 • 2009/10
   - charged at 12.8% on “earnings” above
   £110 per week and on nearly all taxable
   benefits

BARNES ROFFE LLP                         2009
                                  BUDGET 2006
   National Insurances - Planning
                   2008/09          2009/10


   Lower             £90 pw          £95 pw
   Earnings Limit
   Contributions £105 pw             £110 pw
   threshold
   Significance: Remuneration confers entitlement
   to basic state pension and a proportion of second
   state pension for zero NIC cost!!
BARNES ROFFE LLP                              2009
                                       BUDGET 2006
                  National Insurance
                           Other Classes
                           2008/09          2009/10

  Class 2                  £2.30 pw         £2.40 pw

  Class 2 small earnings   £4825 pa         £5075 pa
  exemption


  Class 3                  £8.10 pw         £12.05 pw

  Class 4                  8%(40040-5435)   8%(43875-5715)
                           1% x Excess      1% x Excess


BARNES ROFFE LLP                                      2009
                                               BUDGET 2006
        Mr Average ~ Employee

               2008/09               2009/10

  Gross        £50,000               £50,000

  Tax          (£10,626)             (£9,930)

  NIC (EE’s)   (£3,903)              (£4,260)

  Net          £35,471               £35,810

               Better off by £339.
BARNES ROFFE LLP                               2009
                                        BUDGET 2006
   Mr Average ~ Self Employed

                2008/09           2009/10

  Gross         £50,000           £50,000

  Tax           (£10,626)         (£9,930)

  Class 2 NIC   (£120)            (£125)

  Class 4 NIC   (£2,868)          (£3,114)

  Net           £36,386            £36,831
                Better off by £445

BARNES ROFFE LLP                            2009
                                     BUDGET 2006
            Corporation Tax
 • New rates as previously announced.
 • 22% small companies rate applies from
   1.4.10 ~ deferred a year in PBR.




BARNES ROFFE LLP                       2009
                                BUDGET 2006
 CORPORATION TAX - RATES
                  2008/09    2009/10      2010/11
 Small co.limit   300,000    300,000      300,000
 Small co.rate     21%         21%         22%
 Big co.limit      1.5m       1.5m         1.5m
 Big co.rate       28%         28%         28%
 Changes N/A for North Sea Oil & Gas ring fence
 activities.
BARNES ROFFE LLP                              2009
                                       BUDGET 2006
 CORPORATION TAX - RATES
 Real Rates of Tax     2008/09 2009/10 2010/11
 First £300k             21%       21%      22%
 Next £1.2m            29.75%    29.75%    29.5%
 Balance                 28%       28%      28%
 Changes N/A for North Sea Oil & Gas ring fence
 activities.


BARNES ROFFE LLP                            2009
                                     BUDGET 2006
          CORPORATION TAX
• Foreign dividends to be largely exempted from
  corporation tax, along with other distributions (from
  01.07.09)
• Large companies ~ restriction in finance costs in
  group situations.
• Group relief ~ inadvertent interference with group
  control conditions via issuance of certain types of
  preference shares to external investors not to prohibit
  availability of group relief.

BARNES ROFFE LLP                                2009
                                         BUDGET 2006
        CORPORATION TAX
• 100% FYA on low emission cars (now 110g/km)
  extended to 31.3.2013




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
         CORPORATION TAX
• IBA’s and ABA’s ~ phased out by 2010/11. Balancing
  adjustments immediately written down.
• Until 2010/11 subsequent owners get (subject to
  condition) allowance as per previous owner
• Removal of Balancing Charges.




BARNES ROFFE LLP                              2009
                                       BUDGET 2006
          Incorporate or Not?
 • Small co. CT rate to 20% in 2007/08, then
   21%, 21% and 22% in next three years.
 • Basic rate tax 20 %.
 • 10% band abolished.




BARNES ROFFE LLP                         2009
                                  BUDGET 2006
          Incorporate or Not?
 • Changing tax rates reduce attraction of tax
   driven incorporation.
 • On £40,000 income, advantage of £2,125 in
   2009/10 reduces to £2,040 by 2010/11.
 • On £300,000 income, advantage of £2,495
   in 2009/10 increases to £5,820 by 2010/11.



BARNES ROFFE LLP                         2009
                                  BUDGET 2006
Tax Efficiency 2009/10 (per £1,000)
Corporation Tax Rate     21%     29.75%      28%

Higher Rate Salary     £523.05 £523.05 £523.05
Tax Payer
(41%)       Dividend   £592.50 £526.88 £540.00


Lower Rate Salary      £611.70   £611.70   £611.70
Tax Payer
(31%)      Dividend    £790.00 £702.50 £720.00


BARNES ROFFE LLP                            2009
                                     BUDGET 2006
Tax Efficiency 2010/11 (per £1,000)
Corporation Tax Rate     22%      29.5%      28%

Higher Rate Salary     £523.05 £523.05 £523.05
Tax Payer
(41%)       Dividend   £585.00 £528.75 £540.00


Lower Rate Salary      £611.70   £611.70   £611.70
Tax Payer
(31%)      Dividend    £780.00 £705.00 £720.00


BARNES ROFFE LLP                            2009
                                     BUDGET 2006
 Tax Efficiency 2010/11 High Income
             (per £1,000)

Corporation Tax Rate    22%     29.5%    28%
Highest     Salary     £434.40 £434.40 £434.40
Rate Tax
Payer (51%)
            Dividend   £498.33 £450.42 £460.00




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
Tax Efficiency 2011/12 (per £1,000)
Corporation Tax Rate    22%     29.5%    28%

Higher Rate Salary     £516.33 £516.33 £516.33
Tax Payer
(41.5%)     Dividend   £585.00 £528.75 £540.00


Lower Rate Salary      £604.59 £604.59 £604.59
Tax Payer
(31.5%)    Dividend    £780.00 £705.00 £720.00


BARNES ROFFE LLP                          2009
                                   BUDGET 2006
 Tax Efficiency 2011/12 High Income
             (per £1,000)

Corporation Tax Rate    22%     29.5%    28%
Highest    Salary      £428.07 £428.07 £428.07
Rate Tax
Payer
           Dividend    £498.33 £450.42 £460.00
(51.5%)




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
        CORPORATION TAX
 • From the above, not much disincentive to
   incorporate and take dividends. In fact
   advantages appear to increase as dividends
   & income tax effective rates diverge.
 • Capital gains tax advantages still available
   on sale of goodwill to company where
   entrepreneurs relief available.


BARNES ROFFE LLP                          2009
                                   BUDGET 2006
       Dividends- Settlements
 • Get husband & wife dividends in now, and
   until further notice “fill yer boots”!
 • Income shifting legislation shelved!




BARNES ROFFE LLP                       2009
                                BUDGET 2006
      CAPITAL GAINS TAX
   Annual Exempt Amount: 2008/09    2009/10

   Individuals           £9,600     £10,100


   Trusts (Most)         £4,800     £5,050




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
            INHERITANCE TAX
                                             2008/09         2009/10
•   Annual Exemption                           3,000          3,000
•   Nil Rate Band **                           312,000        325,000
•   Lifetime transfer rate                     20%            20%
•   Death transfer rate                       40%             40%
•   Cumulation period (years)                   7              7
•   Rates of B.P.R.:-
          - Higher                                100%        100%
          - Lower                                 50%          50%
    ** ~ transferable inter-spouse from 9.10.07
BARNES ROFFE LLP                                               2009
                                                        BUDGET 2006
          INHERITANCE TAX
                   2010/11     2009/10     2008/09      2007/08
• Nil Rate Band 350,000        325,000       312,000      300,000
• Looks generous – only 4.3% growth compound.
• Will this keep pace with house price inflation? ~ well,
  probably, for now!!
• Nil Rate Band to be £350,000 in 2010/11.




BARNES ROFFE LLP                                      2009
                                               BUDGET 2006
           INHERITANCE TAX

• Agricultural Property Relief (APR) & Woodland Relief (WR)
    extended geographically to EEA.
•   Similar to CGT Hold over relief on these assets.
•   Applies (APR) after 22.04.09.
•   Applies (WR) before 22.04.09.
•   Applies (Hold over) before 22.04.09
•   Appears a mismatch in the tax paid after 22.04.09 ~ is late
    IHT payment on APR assets rewarded?


BARNES ROFFE LLP                                        2009
                                                 BUDGET 2006
           VALUE ADDED TAX
                                                OLD      NEW
 • Smoking cessation products (OTC)             5%        5%
 • Contraceptives                               5%        5%
 • Advice on welfare of the young,
     elderly or disabled                         5%       5%
 •   Reduced rate(dom. fuel)                     5%       5%
 •   Energy saving materials                     5%       5%
 •   Feminine Hygiene products                   5%       5%
 •   Child car seats                             5%       5%
 •   Urban regeneration                          0/5%    0/5%
 •   Standard rate (15% 1.12.08 to 31.12.09)     17.5%   17.5%
 •   Registration limit                        £67,000   £68,000
 •   Deregistration limit                      £65,000   £66,000

BARNES ROFFE LLP                                         2009
                                                  BUDGET 2006
        VALUE ADDED TAX
 • Cash accounting limit-entry   £1,350,000

 • Cash accounting limit-exit    £1,600,000

 • Assumed unchanged




BARNES ROFFE LLP                              2009
                                       BUDGET 2006
       VALUE ADDED TAX
 Flat Rate Scheme
 • 2 tests for entry:-
 a) Turnover up to £150,000
 b) Income up to £187,500
 • Second test dropped from 1.4.09
 • Exit if “income” exceeds £225,000.
 • For this purpose “income” will now be what you pay
    VAT on.


BARNES ROFFE LLP                            2009
                                     BUDGET 2006
        VALUE ADDED TAX
 • VAT @ 17.5% restored on 01.01.10.
 • 2.5% penalty to combat forestalling through early
   invoicing.
 • Simplification of cross EU border supplies of
   services.
 • Supply will (mostly) default to location of consumer
   and be subject to inverse charge procedure.




BARNES ROFFE LLP                             2009
                                      BUDGET 2006
       VALUE ADDED TAX
 • Simplification of reclaim of inputs in other
   EU countries:- electronic form submission to
   HMRC (previously a paper form to another
   country in another language).
 • Simplification on Option to Tax buildings.




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
  Stamp Duty Land Tax (Leases)
 Residential   0% NPV of rents (up to £125,000)
 (Unchanged)   1% thereafter



 Other         0% NPV of rents (up to £150,000)
 (Unchanged)   1% thereafter




BARNES ROFFE LLP                           2009
                                    BUDGET 2006
 Stamp Duty Land Tax (Freehold)
 0%    Up to £125,000 (£150,000 in disadvantaged
       areas or for commercial property)
       (Unchanged).
 1%    from above to £250,000 (Unchanged).

 3%    £250,001 - £500,000 (Unchanged).

 4%    > £500,000 (Unchanged).

BARNES ROFFE LLP                           2009
                                    BUDGET 2006
                      SDLT
 • 0% limit raised to £175,000 on residential property
    until 31.12.09.




BARNES ROFFE LLP                              2009
                                       BUDGET 2006
                    Car Tax!
 For cars registered pre March 2001:
     Band         New Rate             Old rate

   ≤ 1549cc         £125                £120
                Same next year
   > 1549cc         £190                £185
                £205 next year



BARNES ROFFE LLP                              2009
                                       BUDGET 2006
               Car Tax 2008/09!
    Band           CO2 g/km          Petrol/Diesel     Alternative Fuel
     A                ≤ 100               £0                 £0
     B               to 120               £35                £15
     C               to 150              £120               £100
     D               to 165              £145               £125
     E               to 185              £170               £150
     F               to 225              £210               £195
     G*               226+               £400               £385
      *G applies for new car registrations after 23/03/06

BARNES ROFFE LLP                                            2009
                                                     BUDGET 2006
            Car Tax 2009/10+
    Band      CO2 g/km   2009/10      2010/11
     A         ≤ 100       £0           £0
     B         to 110     £35           £20
     C         to 120     £35           £30
     D         to 130     £120          £90
     E         to 140     £120         £110
     F         to 150     £125         £125
     G,….      To 165     £150         £155



BARNES ROFFE LLP                          2009
                                   BUDGET 2006
               Car Tax 2009/10+
    Band            CO2 g/km            2009/10                2010/11
     H                to 175              £175                  £180
     I                to 185              £175                  £200
     J                to 200              £215                  £235
     K                to 225              £215                  £245
     L                To 255              £405                  £425
     M                > 255               £405                  £435
           Discounts apply to alternatively fuelled vehicles



BARNES ROFFE LLP                                            2009
                                                     BUDGET 2006
     First Year Rates (2010/11)
    Band     CO2 g/km   2010/11
     A        ≤ 100       £0
     B        to 110      £0
     C        to 120      £0
     D        to 130      £0
     E        to 140     £110
     F        to 150     £125
     G,….     To 165     £155



BARNES ROFFE LLP                         2009
                                  BUDGET 2006
     First Year Rates (2010/11)
    Band     CO2 g/km   2010/11
     H        to 175     £250
     I        to 185     £300
     J        to 200     £425
     K        to 225     £550
     L        To 255     £750
     M        > 255      £950




BARNES ROFFE LLP                         2009
                                  BUDGET 2006
           CAR TAX ~ MISC
 • From 06.04.11 £80,000 cap on list price for BIK
    purposes abolished.




BARNES ROFFE LLP                             2009
                                      BUDGET 2006
      OTHER DUTIES ~ 1.12.08
 • Wine: +13p/bottle (except sparkling &
     Champagne @ 17p).
 •   Beer: +3p/pint (cider & perry @ 3p/litre).
 •   Spirits: +53p bottle
 •   Cigarettes: +17p per 20.
 •   Cigars: +5p per 5.
 •   Fuel: +2p/litre from 01.12.08. + 1.84p from
     1.4.09.
BARNES ROFFE LLP                           2009
                                    BUDGET 2006
     OTHER DUTIES ~ NOW
 • Wine: +4p/bottle (except sparkling &
   Champagne @ 5p).
 • Beer: +1p/pint (cider +1p/litre) (sparkling + 4p
   per 75cl).
 • Spirits: +13p bottle




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
     OTHER DUTIES ~ NOW
 • Cigarettes: +7p per 20.
 • Cigars: +3p per 5.
 • Fuel: +2p/litre from 01.12.08. + 1.84p from
   1.4.09, +2p Sep 09 & 1p over inflation
   annually to April 2013.




BARNES ROFFE LLP                         2009
                                  BUDGET 2006
        COMPANY CARS
 • C02/km emission level for 15% start
   BIK will be 130g/km in 2008/09
   (135g/km in 2008/09)
 • 2009/10 ~ 10% BIK for CO2/km
   emission < 120g;
 • Fuel basis @ £16,900 in 2009/10 as in
   2008/09.


BARNES ROFFE LLP                    2009
                             BUDGET 2006
        COMPANY VANS
 • No change if insignificant private use.
 • If private use is unrestricted, from
   06.04.07 benefit charge is £3000 with
   extra £500 for fuel if appropriate;
 • Double cab pick-up is still a van.



BARNES ROFFE LLP                      2009
                               BUDGET 2006
     Miscellaneous - EIS & VCT
                                        EIS            VCT
 Inv limit                           £500,000       £200,000
 Minor tinkering with qualification rules for investee vehicles
 ~ Shipbuilding , coal and steel production no longer allowed
 Inv holding period – OLD              3yrs             5yrs
 Assume unchanged -NEW                 3yrs            5yrs
 I.T. relief up to - OLD               20%             30%
 Assumed unchanged- NEW                20%             30%
 CGT shelter                            Yes             No

BARNES ROFFE LLP                                       2009
                                                BUDGET 2006
               EIS & VCT
 • Currently 80% money raised must be in use
   within 12 months, the balance a year later.
 • Simplified:- 100% to be in use 24 months
   after issue or within 24 months of trade
   commencement if later.




BARNES ROFFE LLP                         2009
                                  BUDGET 2006
                 EIS Only
 • Time limit on other same day capital raised
   being used is abolished.
 • Qualifying share for share exchanges of EIS
   shares no longer to trigger CGT other than
   deferred gains.
 • Carry back of relief (currently 50% of
   £50,000 before 6th October) to be 100% of
   whole at any time.

BARNES ROFFE LLP                         2009
                                  BUDGET 2006
  MISCELLANEOUS - LANDFILL
           TAXES
 • Standard Rate up from £40 to £48 per tonne
   from 1.4.09. To increase by £8 per tonne
   annually from 01.04.11 01.04.13.
 • Inactive waste increases frozen at £2.50 per
   tonne.




BARNES ROFFE LLP                          2009
                                   BUDGET 2006
        Miscellaneous – ISA’s
             Annual Subscription Limits
          Now                From 6.4.10 (6.10.09 if > 50)
 Cash ISA   £3600 p.a.     Cash ISA     £5,100 p.a.
   Stocks    £7200 p.a.       Stocks        £10200 p.a.
    and      (with             and          (with
   Shares    aggregate        Shares        aggregate
             limit of                       limit of
    ISA      £7200 over        ISA          £7200 over
             both kinds)                    both kinds)

BARNES ROFFE LLP                                 2009
                                          BUDGET 2006
                 Big Brother
 • HMRC to publish names / addresses / trades of tax
   avoiders where tax > £25,000 (date TBA)
   (Currently only if a criminal conviction)
 • Large companies / groups to notify HMRC of
   “Senior Accounting Officer” (SAO) who must
   take reasonable steps to establish / monitor
   systems for adequacy for tax reporting.




BARNES ROFFE LLP                             2009
                                      BUDGET 2006
                Big Brother
 • SAO to specify to HMRC inadequacies and
   confirm communicated to auditors
 • Penalties for careless / deliberate non-
   compliance.
 • Customs officials at airports no longer need
   reasonable grounds to check intra-EU
   movements.


BARNES ROFFE LLP                          2009
                                   BUDGET 2006
             Administration
 • Record keeping compliance requirements
   extended to environmental taxes, IPT,
   SDLT, SDRT, IHT, PRT from 1.4.10.
 • New penalty regime for late payments /
   returns re PAYE, NIC, CT (N/a if a time to
   pay agreement in place).
 • Typically 5% of tax @ 1 month with further
   5% penalties @ months 6 and 12.

BARNES ROFFE LLP                        2009
                                 BUDGET 2006
              Administration
 • £100 fines for late returns + daily penalties
   and further 5% tax geared penalties (70% or
   100% after 12 months if deliberate
   withholding of information with
   concealment).
 • PAYE defaults: penalties based on number
   of defaults. None if only one, then 2% to
   5%, with a further 5% @ month 12.

BARNES ROFFE LLP                          2009
                                   BUDGET 2006
            Administration
 • New “Voluntary Managed Payment Plans”
   (MPPs).
 • Tax payments spread evenly over a period
   straddling due dates.
 • No interest / penalties.
 • Some time after April 2011.



BARNES ROFFE LLP                       2009
                                BUDGET 2006
            Administration
 • Interest on under / over payments to be
   harmonised across taxes.
 • New HMRC Charter by 31.12.09 governing
   standards of HMRC behavoir.




BARNES ROFFE LLP                      2009
                               BUDGET 2006
           Miscellaneous –
   Self Assessment Filing Deadlines
 • Affects 2008/09 Returns.
 • Paper Returns ~ 31st October following tax year
   (2008/09 by 31.10.09).
 • On-line ~ 31st January following tax year (2008/09
   by 31.01.10).
 • Taxpayer amendments will be linked to statutory
   filing date for both.



BARNES ROFFE LLP                              2009
                                       BUDGET 2006
             TIME LIMITS
  • 19 May 2009 – Submission of forms P35 and
    P14’s.

  • 6 July 2009 - Submission of forms P11D to
    HMRC.

  • 6 July 2009 – Submission of forms 42.

  • 19 July 2009 – Payment of Class 1A NIC on
    Benefits for year ended 5 April 2009.

BARNES ROFFE LLP                             2009
                                      BUDGET 2006
            TIME LIMITS
 • 31 July 2009 – 2nd Payment on Account of
   Self Assessment for 2008/09.

 • 28 August 2009 – 5% surcharge on
   2007/08 tax still outstanding.

 • 31 January 2010 – Balance tax payment
   for 2008/09 and 1st instalment of 2009/10.


BARNES ROFFE LLP                        2009
                                 BUDGET 2006
       BARNES ROFFE LLP

     TOP 10 TAX TIPS – POST BUDGET

              Mario Cientanni
                BSc FCA
                 Partner




BARNES ROFFE LLP                       2009
                                BUDGET 2006
            Top Ten Tips - 2008
 1) Spousal dividend pre       6) Revisit NRB wills for
    6.4.09.                        BPR double dip.
 2) Spousal transfer to bank   7) Purchased IIP trust
    indexation.                    interests for IHT.
 3) Trigger gains for          8) Salary alternatives.
    business asset taper       9) AIM investments for
    relief.                        IHT shelter.
 4) Maximise use of basic      10) Family debt & IHT.
    rate band.
 5) Property to LLP.


BARNES ROFFE LLP                                 2009
                                          BUDGET 2006
     Out of the Charts This Year!
 •   Spousal transfers to bank indexation ~
     indexation abolished so its now too late!
 •   Trigger gains for business asset taper
     relief ~ taper relief abolished so its nw too
     late.
 •   Spousal dividend pre 6.4.09 ~ income
     shifting shelved. Multiple share classes
     still sound, and see new entry in 2009!

BARNES ROFFE LLP                            2009
                                     BUDGET 2006
          Top Ten Tips 2009




BARNES ROFFE LLP                2009
                         BUDGET 2006
      (10) (6) Revisit NRB Wills
  New rules re inter-spouse transfer of unused proportion of
  NRB on second death mean you should:-
    1) Review current wills;
    2) Ensure NRB trusts also take up 100% BPR property;
    3) Consider worth of NRB legacy ~ will settled assets
       grow faster in value than the NRB itself?
    4) As a minimum arrangements must enable “double
       dip” style planning after first death!




BARNES ROFFE LLP                                    2009
                                             BUDGET 2006
    (9) (10) Family Debt & IHT
  • Simple planning!!
  • Example: Husband sells assets standing
    at a gain to wife, left outstanding on debt.
  • Debt gifted to children.
  • No CGT on sale.
  • Debt gift is a PET.
  • BUT...SDLT is charged on property sale.


BARNES ROFFE LLP                           2009
                                    BUDGET 2006
    (8) (9) AIM Investments for IHT
                Shelter

 • BPR after two years.
 • Business asset taper relief probable. 10% tax on
   gains after 2 years.
 • Easy in / easy out.
 • (Advice needed before investing)
 • Alternatively form own company now & hold
   dormant. After 2 years a deathbed bonus
   subscription and trade start-up could reduce estate!

BARNES ROFFE LLP                               2009
                                        BUDGET 2006
      (7) (8) Salary Alternatives

 • Employee pension contributions taken on ~ save
   up to £250 per £1,000 of increase in scheme value.
 • Nursery voucher schemes ~ save up to £1,100 per
   annum per participant.
 • Long service awards @ £50 x years service (Min
   20).
 • Staff suggestions re employer’s activity at lower
   of £5,000 or 50% x expected year one savings or
   10% x expected first ten years’ savings.


BARNES ROFFE LLP                              2009
                                       BUDGET 2006
        (6) (7) IIP Trusts for IHT
  New IIP trusts not included in chargeable estate so
  consider the following:-
    1) One or more children / grandchildren borrow cash
       and settle full NRB on IIP for self;
    2) Large estate holder borrows (secured on estate) cash
       and acquires the IIP interests;
    3) Children / grandchildren repay borrowings;
    4) IIP investment income services borrowings of estate
       holder.
    5) Chargeable assets replaced with exempt ones.

BARNES ROFFE LLP                                     2009
                                              BUDGET 2006
   (5) (4) Maximise Use of Basic
           Tax Allowances
 • Basic rate band for income tax;
 • Spouse’s basic rate band for income tax
   (See also dividends);
 • Lower profit band for corporation tax (get
   out of 29.75%);
 • Use CGT annual exemptions – annually!



BARNES ROFFE LLP                          2009
                                   BUDGET 2006
   (4) (Re-entry) EMI & Quasi EMI
               Schemes

 • Low cost incentivisation for key staff when cash
   flow poor.
 • No loss of control in company.
 • 18% tax possible on gains, c/f tax rates up to 50%.
 • Non-qualifying trade? A Quasi EMI via an EBT
   may help.
 • Company tax relief on exercise at
   £OMV-£exercise. Can use EBT to raise OMV.

BARNES ROFFE LLP                               2009
                                        BUDGET 2006
  (3) (New) Retained Interest Trusts
              for IHT
  New IIP trusts not included in chargeable estate so, for
  those in advancing years, consider the following:-
    1) Settle PPR + Cash onto a “special” discretionary
       trust. Rent PPR for 6 months.
    2) IIP for 79.5 years vests after 6 months.
    3) IIP restricts value of transfer below nil rate band.
    4) IIP is outside estate, but its value is not charged to
       IHT as it leaves via action of trust.
    5) Estate substantially reduced after 6 months.


BARNES ROFFE LLP                                       2009
                                                BUDGET 2006
         (2) (5) Property to LLP
 • Trading company (or even investment company)
   transfers property to LLP (or cash for property
   investment) which has company & its
   shareholders as members to secure future capital
   growth taxed at 18% (now up to 54% if left in
   company!).
 • Current property value dip makes this more
   attractive.
 • Other tips – incorporate a partnership for low / no
   tax on transferred goodwill value.
 • Serial companies for property development.

BARNES ROFFE LLP                               2009
                                        BUDGET 2006
   (1) (New) Dividend Pre 6.4.10
 • On 6.4.10 highest rate of income tax
   increases to 50% (42.5% dividend rate);
 • If tax can be financed, maximise 2009/10
   distributions at effective rate on net
   dividend of 25% (36.11% after 5.4.10);
 • Can leave o/s on company loan account.



BARNES ROFFE LLP                        2009
                                 BUDGET 2006
       BARNES ROFFE LLP
            BUDGET SEMINAR

      SINGLEWELL MANOR HOTEL

              23 APRIL 2009




BARNES ROFFE LLP                     2009
                              BUDGET 2006

				
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