Finance Act 2009

Publication Date:January 01, 2009


Finance Act 2009

2009 c. 10

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[21 July 2009]

Most Gracious Sovereign

We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1 Charges, rates, allowances, etc

Part 1

Charges, rates, allowances, etc

Income tax

Income tax

S-1 Charge and main rates for 2009-10

1 Charge and main rates for 2009-10

(1) Income tax is charged for the tax year 2009-10.

(2) For that tax year—

(a)

the basic rate is 20%, and

(b)

the higher rate is 40%.

S-2 Basic rate limit for 2009-10

2 Basic rate limit for 2009-10

(1) For the tax year 2009-10 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “£37,400”.

(2) Accordingly, section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.

S-3 Personal allowance for 2009-10 for those aged under 65

3 Personal allowance for 2009-10 for those aged under 65

(1) For the tax year 2009-10 the amount specified in—

(a)

section 35 of ITA 2007, and

(b)

section 257(1) of ICTA,

(personal allowance for those aged under 65) is replaced with “£6,475”.

(2) Accordingly—

(a)

section 57 of ITA 2007, so far as relating to the amount specified in section 35 of that Act, and

(b)

section 257C of ICTA, so far as relating to the amount specified in section 257(1) of that Act,

(indexation) do not apply for the tax year 2009-10.

S-4 Reduction of personal allowance for those with income exceeding £100,000

4 Reduction of personal allowance for those with income exceeding £100,000

(1) In section 35 of ITA 2007 (personal allowances for those aged under 65), the existing provision becomes subsection (1) of that section; and after that subsection insert—

“(2) For an individual whose adjusted net income exceeds £100,000, the allowance under subsection (1) is reduced by one-half of the excess.

(3) If the amount of any allowance that remains after the operation of subsection (2) would otherwise not be a multiple of £1, it is to be rounded up to the nearest amount which is a multiple of £1.

(4) For the meaning of “adjusted net income” see section 58.”

(2) In sections 36(2)(b) and 37(2)(b) of ITA 2007 (limit on reduction of personal allowances for those aged 65 to 74 or 75 and over), for “the amount of a personal allowance under section 35” substitute “the amount of any allowance to which the individual would be entitled under section 35 if under the age of 65 throughout the tax year”.

(3) In section 57(1)(a) and (3)(a) of ITA 2007 (indexation of allowances), for “35” substitute “35(1)”.

(4) The amendments made by subsections (1) and (2) have effect for the tax year 2010-11 and subsequent tax years.

(5) The amendment made by subsection (3) has effect for finding allowances for the tax year 2011-12 and subsequent tax years.

S-5 Abolition of personal reliefs for non-residents

5 Abolition of personal reliefs for non-residents

Schedule 1 contains provision abolishing personal reliefs for non-residents.

S-6 Additional rate, dividend additional rate, trust rates and pension tax rates

6 Additional rate, dividend additional rate, trust rates and pension tax rates

(1) Section 6 of ITA 2007 (rates of income tax) is amended as follows.

(2) In subsection (1), omit the “and” at the end of paragraph (b) and insert at the end

“, and

(d) the additional rate.”

(3) In subsection (3)(b), for “and dividend upper rate” substitute “, dividend upper rate and dividend additional rate”.

(4) In section 9 (trust rate and dividend trust rate)—

(a)

in subsection (1), for “40%” substitute “50%”, and

(b)

in subsection (2), for “32.5%” substitute “42.5%”.

(5) Schedule 2 contains provision supplementing this section (including provision about rates under Part 4 of FA 2004).

(6) The amendments made by this section have effect for the tax year 2010-11 and subsequent tax years.

Corporation tax

Corporation tax

S-7 Charge and main rates for financial year 2010

7 Charge and main rates for financial year 2010

(1) Corporation tax is charged for the financial year 2010.

(2) For that year the rate of corporation tax is—

(a)

28% on profits of companies other than ring fence profits, and

(b)

30% on ring fence profits of companies.

(3) In subsection (2) “ring fence profits” has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A) of that Act).

S-8 Small companies' rates and fractions for financial year 2009

8 Small companies' rates and fractions for financial year 2009

(1) For the financial year 2009 the small companies' rate is—

(a)

21% on profits of companies other than ring fence profits, and

(b)

19% on ring fence profits of companies.

(2) For the financial year 2009 the fraction mentioned in section 13(2) of ICTA is—

(a)

7/400ths in relation to profits of companies other than ring fence profits (“the standard fraction”), and

(b)

11/400ths in relation to ring fence profits of companies (“the ring fence fraction”).

(3) See section 7(3) of FA 2008 for provision applying section 3(3) to (7) of FA 2007 in relation to profits for an accounting period any part of which falls in the financial year 2009.

(4) In this section “ring fence profits” has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A) of that Act).

Value added tax

Value added tax

S-9 Extension of reduced standard rate and anti-avoidance provision

9 Extension of reduced standard rate and anti-avoidance provision

(1) The Value Added Tax (Change of Rate) Order 2008 ( S.I. 2008/3020) (reducing standard rate of value added tax to 15 per cent) is to cease to be in force on 1 January 2010 (rather than ceasing to be in force on 1 December 2009 in accordance with section 2(2) of VATA 1994).

(2) Schedule 3 contains—

(a)

provision for a supplementary charge to value added tax on supplies spanning the date of the VAT change (see Parts 1 to 5), and

(b)

minor amendments of provisions about orders changing the standard rate of value added tax (see Part 6).

Stamp duty land tax

Stamp duty land tax

S-10 Thresholds for residential property

10 Thresholds for residential property

(1) Part 4 of FA 2003 (stamp duty land tax) has effect in relation to transactions with an effective date on or after 22 April 2009 but before 1 January 2010 as if—

(a)

in section 55(2) (amount of tax chargeable: general), in Table A (bands and percentages for residential property), for “£125,000” (in both places) there were substituted “£175,000”, and

(b)

in paragraph 2(3) of Schedule 5 (amount of tax chargeable: rent), in Table A (bands and percentages for residential property), for “£125,000” (in both places) there were substituted “£175,000”.

(2) The following are revoked—

(a)

the Stamp Duty Land Tax (Variation of Part 4 of the Finance Act 2003) Regulations 2008 ( S.I. 2008/2338), and

(b)

the Stamp Duty Land Tax (Exemption of Certain Acquisitions of Residential Property) Regulations 2008 ( S.I. 2008/2339).

(3) The revocations made by subsection (2) have effect in relation to transactions with an effective date on or after 22 April 2009.

Alcohol and tobacco duties

Alcohol and tobacco duties

S-11 Rates of alcoholic liquor duty

11 Rates of alcoholic liquor duty

(1) ALDA 1979 is amended as follows.

(2) In section 5 (rate of duty on spirits), for “£21.35” substitute “£22.64”.

(3) In section 36(1AA)(a) (standard rate of duty on beer), for “£14.96” substitute “£16.47”.

(4) In section 62(1A) (rates of duty on cider)—

(a)

in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for “£188.10” substitute “£207.20”,

(b)

in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£43.37” substitute “£47.77”, and

(c)

in paragraph (c) (rate of duty per hectolitre in any other case), for “£28.90” substitute “£31.83”.

(5) For the table in Schedule 1 substitute—

“ . Table of rates of duty on wine and made-winePart 1Wine or made-wine of a strength not exceeding 22 per centDescription of wine or made-wineRates of duty per hectolitre£Wine or made-wine of a strength not exceeding 4 per cent65.94Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent90.68Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not being sparkling214.02Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent207.20Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent274.13Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent285.33Part 2Wine or made-wine of a strength exceeding 22 per centDescription of wine or made-wineRates of duty per litre of alcohol in wine or made-wine£Wine or made-wine of a strength exceeding 22 per cent22.64.”

(6) The following are revoked—

(a)

the Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order 2008 ( S.I. 2008/3026), so far as relating to excise duty on alcoholic liquors, and

(b)

the Alcoholic Liquor (Surcharge on Spirits Duty) Order 2008 ( S.I. 2008/3062).

(7) The amendments made by this section are treated as having come into force on 23 April 2009.

S-12 Rates of tobacco products duty

12 Rates of tobacco products...

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