Changes to Capital Allowances
For the 2009/10 Tax Year Capital Allowances are calculated in the main at 20% on a reducing balance. Previously the reducing rate has been 25% through 2007/08. However, an Annual Investment Allowance has been introduced whereby qualifying spending by qualifying businesses attracts relief of 100% up to £50000 spent. (£100,000 for future years)* (emergency budget in June 2010 reversed this higher threshold). There are exceptions to this (most cars for example). A "small pools allowance" of up to £1000 is also available - if the balance of cost after claiming Annual Investment Allowance, together with any balance brought forward from any previous year, is £1000 or less then the full amount is claimable.
As you can see from the above, Capital Allowances remain an area where businesses need to be aware of current rates to maximise tax efficiency.
Furnished Holiday Lettings
The 2009 budget (April 2009) proposed that with effect from 2010/11 the distinction between Furnished Holiday Lettings and other Residential Lettings will cease with the repealing of legislation that relates to Furnished Holiday Lettings. Prior to this, Furnished Holiday Lettings have attracted additional Income and Capital Gains Tax reliefs (Losses available to offset against other income, inclusion of profits for pension relief calculations, Capital Gains Rollover Relief etc). The emergency budget in June 2010 proposed a potential return to pre 2010/11 rules.
New Top Rate of Tax
A new rate of 50 pence in the pound is now in force for earnings over and above £150000 p.a. With this, a new top rate for dividend income of 42.5% also applies for those taxpayers affected.
These changes take effect in the 2010/11 Tax Year, beginning 5 April 2010. Also, a restriction in Personal Allowances now applies for those individuals earning in excess of £100000, with the Personal Allowance reducing by £1 for every £2 above the limit. This is the first time Personal Allowances have been affected in this way, though the calculation has been applied previously in calculating Marginal Age Allowance for Pensioners.
Whilst we cannot do anything to change tax rates it may be possible to look at an individual situation and take advantage of legal opportunities to reduce an individuals overall liability, dependant on attitude to general investment risk etc.
