Personal Tax
David Kilshaw, Head of Private Client, KPMG LLP (UK)
Snapshot
Budget 2009: Personal Tax Summary
In our Budget predictions we suggested that, given the current state of the economy, the Chancellor would be best advised to leave individuals and companies alone. It is disappointing, therefore, that there are 220 pages of Budget Notes which introduce yet more complex provisions to already over-burdened taxpayers. It is comforting to note that unincorporated businesses have been largely left alone; the same however cannot be said for individuals.
The main feature today is the increase of the income tax rate for those earning over £150,000 to 50 percent. This represents a change to the previously announced rate of 45 percent and has been brought forward a year to apply from 6 April 2010. The gradual withdrawal of the personal allowance for incomes over £100,000 does nothing to address the anomaly present in the rules as originally announced in the Pre-Budget Report which results in the first £12,950 of such income being taxed at an effective rate of 60 percent.
The withdrawal of higher rate relief for pension contributions made by those earning over £150,000 is wrong in principle and will not encourage contributions.
The Government have introduced a number of measures to correct areas where UK tax law is inconsistent with EU law. However, there does not seem to have been a consistent approach taken, with inheritance tax reliefs and tax credits on dividends being extended while the favourable tax treatment currently available for furnished holiday lettings is to be withdrawn for everyone.
On the changes to residence and domicile it is disappointing that the Government have not responded to comments that the legislation introduced in 2008 is overly complex and, therefore, difficult if not impossible to comply with. The minor amendments made in the Budget, while welcome, are likely to have little practical impact on non-domiciled taxpayers and on the attractiveness of the UK as a location of choice.
For more information contact:
David Kilshaw
For all Budget press enquiries please contact KPMG's press office on
020 7694 8773.
- Additional rate of income tax and income related reduction of the personal allowance from 2010-11
- Pensions: Limiting tax relief for high income individuals (anti-forestalling)
- Taxation of Personal Dividends
- Furnished Holiday Accommodation
- Extension of agricultural property and woodlands reliefs to land in the European Economic Area
- Residence and domicile
- Individual Savings Accounts
- Extension of Trading Loss Carry Back for Business - Unincorporated Businesses and Partnerships
- Changes to EIS / VCT
- Charities: Substantial Donor Regulations
- Gift Aid
- HMRC Charter
- Avoidance using Life Insurance Policies
- Anti Avoidance - Interest Relief
- UK Personal Allowances and Reliefs for Non-Resident Individuals
- Transfers of Income Streams
- Financial Services Compensation Scheme: Payments Representing Interest
- Child Trust Fund: Payments for Disables Children
- Reclaiming income tax, capital gains tax and corporation tax overpayments
- Review of HMRC Powers, Deterrents and Safeguards
- New rules for investment trusts investing in interest-bearing assets
- Offshore Funds
- Chargeable gains and offshore funds
- Tax elected funds
- Certainty on trading and investment for authorised investment funds and investors in equivalent ofshore funds
- Taxation of personal dividends - distributions from offshore funds
- Taxation of Payments from the Financial Assistance Scheme
- Avoiding Unintended Tax Consequences in Relation to Pension Savings
- Publishing the names of deliberate tax defaulters
