Wyatt and Co

Summary of the main points from the Emergency Budget (June 2010)
Value Added tax (VAT)
The standard rate VAT will rise from 17.5% to 20% on 4 January 2011.
Zero-rated items, such as children' clothes, food and newspapers, won't be affected by the increase.
Capital gains tax (CGT)
With immediate effect, and motivated by wishing to discourage tax avoidance by higher-rate taxpayers, the government increased capital gains tax (CGT) from 18% to 28% for those who pay income tax at 40% or 50%.
For basic rate taxpayers at 20%, they will continue to be charged CGT at 18%
The annual exemption for CGT remained unchanged at £10,100.
The limit for entrepreneurs relief was increased from £2m to £5m, for qualifying gains made over a lifetime.
Income tax
Income tax rates remain the same: the basic rate of 20%, the higher rate of 40% for those with taxable income above £37,400 and the top rate of 50% for those taxable income over £150,000.
From 6th April 2010, the personal allowance - the income you're permitted to receive tax-free - will be increased from £6,475 to £7,475. On taxable income of more than £100,000, the personal allowance will be withdrawn at the rate of £1 for every £2.
Age-related allowances for those over 65 and 75 remain at £9,490 and £9,640 respectively. The taxable income limit for age-related allowance will remain at £22,900 (above this, £1 is withdrawn for every £2).
National Insurance
From 6th April 2011, national insurance (NI) contributions will rise by 1% for employees, from 11% to 12%, and by the same amount for employers, from 12.8% to 13.8% (despite the pledge to drop the previous government's proposed 'jobs' tax').
The threshold for employers paying Class 1 NI contributions will rise by £21 per week above indexation from April 2011.(The exact impact of this isn't yet known, as the value of indexation will be determined by data available in the autumn).
A further concession to employers is a three-year scheme to exempt new businesses in targeted regions from up to £5,000 in NI payments for each of the first 10 employees that they hire in their first year of business.
Pension tax relief to be reviewed
Under measures introduced by the previous government, those earning more than £150,000 will receive only 50% tax relief on pension contributions up to £20,000. Above this, they'll get only basic rate (20%) tax relief.
Inheritance tax
The inheritance tax threshold has been left unchanged, at £325,000.
Child tax credit
Child tax credit will be progressively withdrawn from households with an income of over £40,000. The child element will be increase by £150 above the Consumer Prices Index (CPI) in April 2011 for those who're eligible to receive it.
Child benefit will be frozen for three years, from April 2011.
As previously announced, Child Trust Fund contributions from the government will cease from 1 January 2011.
Insurance premium tax
The tax charge on insurance premiums will be increased from 5% to 6% - applying to car and home insurance. Travel insurance, which is already taxed at 17.5%, will now be taxed at 20%. New rates apply from 4 January

Submitted by Nigel Wyatt on Tuesday 31st March 2009