Seb Tubb, Tax Partner at Mazars

According to Seb Tubb of the Bedford office of international accountancy firm Mazars, none of the changes in today's Pre-Budget Report will affect those with taxable income of under about £43,000.

“Personal allowances and tax bands in the tax year 2010/11 will be the same as this tax year. These usually move in line with the retail prices index (RPI) to September each year. RPI to September 2009 fell by 1.4%, but allowances will not be reduced. The basic rate of tax is being kept at 20% and the level at which you start paying tax at 40% has not changed,” says Seb.

It was also announced today that for businesses that operate through companies, the planned increase in the small companies rate of corporation tax from 21% to 22% has been delayed for a further year.

Seb comments: “It's disappointing that there has been no extension to the incentives for small businesses. If your capital expenditure on plant and machinery other than cars is more than £50,000 a year, businesses will only have until 31 March next year to benefit from the 40% temporary first year allowances – as these have not been extended. On a more positive note, HMRC will continue to offer its Business Payment Support Service allowing companies in financial difficulties more time to pay their tax bills.”

In addition, the Chancellor revealed that future increases in both employer and employee National Insurance rates - expected to have been 0.5% each - will instead now be 1% each. There will however be an increase in the point at which NI is first due. Says Seb: “This means there will actually be a reduction of NI for lower earners – whilst those earning more than £20,000 will pay more.”

Posted Monday December 14^th 2009
By Rachael Bonfield