I have explained in a separate blog that there is invariably a long time lag between Budget announcements and the time that they actually impact the tax bills payable by the self employed.
With due credit to the ICAEW Tax Faculty, (who first collated a list) here's a list of 24 tax changes that will have more of an immediate impact than almost anything the Chancellor might mention during the Budget later today. (NB: Tax rates and allowances for 2009/10 appear at items 1 and 2 of the second list 'From 6 April 2009'):
From 1 April 2009:
- New powers and safeguards covering PAYE, VAT, Income Tax, Capital Gains Tax and Corporation Tax. I've blogged about these here and here.
- New time limits for tax claims and assessments. Many are now 4 years rather then the 6 years they were previously.
- New two-tier system of tax tribunals - a 'first-tier tribunal' and an 'upper tribunal'. General Commissioners, Special Commissioners and the VAT & Duties Tribunal no longer exist.
- Corporation tax rates were to change but will now remain 28% (main) and 21% (small) for Financial Year 2009.
- The Corporation Tax Act 2009 (CTA 2009), produced by the Tax Law Rewrite project, received Royal Assent on 26 March 2009. It came into force on 1 April 2009 and has effect for corporation tax purposes for accounting periods ending on or after 1 April 2009 and for income tax and capital gains tax purposes for the tax year 2009/10 and subsequent tax years. Although, the CTA 2009 does not change the effect of the law it does correct some minor anomalies. It also incorporates two extra-statutory concessions and one statement of practice. Particular features include the removal of references to 'schedules' and 'cases 'and the amalgamation of profits arising from UK and non-UK sources.
- New rules for tax relief for business expenditure on cars (Corporate) – capital allowances will be dependent on emission levels. Hire charges for cars will only be restricted for cars emitting over 160g/km using flat rate of 15%. The new rules for cars are that those with:
- Emissions below 160g/km go into 20% pool
- Emissions over 160g/km go into 10% pool
- 100% FYA still available for cars not more than 110g/km
- Headline rate of Industrial/Agricultural Buildings Allowances falls to 2% (was 3%).
- Amended loan relationship rules for accounting periods beginning on/after 1 April 2009. Where one company releases a trade debt owed by another, the debtor will not be charged on the amount released. As before, the creditor company does not get relief for the amount written off.
- Changes to simplify the entry and leaving rules for small businesses using the VAT flat rate scheme, see PBRN25, 2008 Pre Budget Report Notes. The entry test requiring total business income to be less than £187,500 is removed completely. Eligibility to join the flat rate scheme will be determined solely by the turnover of the business.
- VAT staff hire concession ends (announced in Budget 2008). This had allowed employment businesses supplying temporary staff to charge VAT only on their own fees and not on wages paid by the client to workers.
- Turnover ceiling for using a published VAT retail scheme is raised to £130m, , see PBRN24, 2008 Pre Budget Report Notes.
- Newly rated premises qualify immediately for small business rate relief.
- For 2009/10 only empty premises with rateable value below £15,000 are exempt from business rates.
- Expenditure incurred on or after 1 April on restoring long term derelict land may qualify for land remediation relief.
From 6 April 2009:
- New rates of tax free allowances for 2009/10: eg: personal allowance up from £6.035 to £6,475
- Income tax rates and bands for 2009/10 eg: basic rate of 20% (unchanged) will now apply to incomes upto £37,400 (previously £34,800)
- Employers with 50 or more employees have to file their employee starter and leaver notifications and similar pensions notifications online.
- Mandatory e-filing of PAYE end of year returns by small employers (<50>
- A new A4 version of the P45 form replaces the old style A5 form.
- Changes to form P46 (Car), used for reporting the private use of cars supplied by employers.
- Benchmark rates for day subsistence introduced - HMRC have introduced a set of benchmark scale rates that employers can use to make certain day subsistence payments free of tax and NI to employees who incur allowable business travel expenses. Employers do not have to use the benchmark rates. They can reimburse their employees' actual expenditure or apply to HMRC to agree a scale rate appropriate for their business needs in a dispensation.
- Only earnings up to ‘upper accruals point’ of £770 per week will accrue entitlement to the income related S2P. Earnings between UAP and upper earnings limit incur additional NIC but for no extra pension. Upper earnings limit rises from £40,040 to £43,875, giving an increase in annual NIC payable by many higher rate taxpayers, of £383.
- Leaflet IR20 replaced - Booklet IR20: Residents and non-residents – liability to tax in the United Kingdom has been replaced by booklet HMRC6: Residence, domicile and the remittance basis. Any practices associated with IR20 – whether overtly expressed or not – will not apply from 6 April 2009, unless provided for outside of IR20 (in statute law, in case law, in a published extra statutory concession, or in a guidance note).
- New rules for tax relief for business expenditure on cars (unincorporated businesses) as for companies, see above.