Office of Public Sector Information
1.These notes relate to the Finance Act 2009 that received Royal Assent on 21st July 2009. They have been prepared by HM Revenue and Customs in partnership with HM Treasury in order to assist the reader in understanding the Act. They do not form part of the Act and have not been endorsed by Parliament.
2.The notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So, where a section or part of a section does not seem to require any explanation or comment, none is given.
3.The Act is divided into nine parts:
Charges, rates, allowances, etc
Income tax, corporation tax and capital gains tax
Pensions
Value Added Tax
Stamp taxes
Oil
Administration
Miscellaneous
Final Provisions
The Schedules follow the sections on the Act.
4.Terms used in the Act are explained in these notes where they first appear. Hansard references are provided at the end of the notes.
1.Section 1 imposes the income tax charge for 2009-10 and sets the basic rate of income tax at 20 per cent and the higher rate at 40 per cent.
2.Subsection (1) imposes the income tax charge for 2009-10.
3.Subsection (2)(a) sets the basic rate of income tax at 20 per cent.
4.Subsection (2)(b) sets the higher rate of income tax at 40 per cent.
5.Income tax is an annual tax re-imposed each year by Parliament (even if the proposed rates are the same as for the previous year). The table below sets out the main rates and income bands for 2008-09 and the proposed main rates and income bands for 2009-10:
| 2008-09 | 2009-10 | |
|---|---|---|
| Basic rate | £0 - £34,800 at 20 per cent | £0 - £37,400 at 20 per cent |
| Higher rate | Over £34,800 at 40 per cent | Over £37,400 at 40 per cent |
The basic rate limit of £37,400 as identified in the table above is set for 2009-10 by section 2 of this Act.
1.Section 2 sets the basic rate limit for income tax at £37,400 for 2009–10.
2.Subsection (1) replaces the amount currently in section 10(5) of the Income Tax Act 2007 (ITA) to set the basic rate limit at £37,400.
3.Subsection (2) disapplies the requirement under section 21 of ITA to index the basic rate limit for the 2009-10 tax year only.
4.An individual’s taxable income up to the basic rate limit is liable to income tax at the basic rate of income tax. An individual’s taxable income above the basic rate limit is liable to income tax at the higher rate of income tax.
5.The provisions in ITA which provide for the basic rate of income tax also provide for the amount, unless Parliament determines otherwise, to be increased annually by indexation. HM Treasury order of 24 November 2008 (2008 No. 3023) which specified the indexed amount for the 2009-10 tax year, is overridden by this section.
6.The table below sets out the amounts of the basic rate limit for 2008–09, the amount specified by order for 2009-10 and the amount specified by this section for 2009-10:
| 2008-09 | 2009-10 by Treasury order | 2009-10 by this section |
| £34,800 | £36,600 | £37,400 |
7.The effect of this section is to override the amount specified by order for the basic rate limit and to set it at an amount £800 greater than the indexed increase.
1.Section 3 sets the personal allowance for income tax at £6,475 for 2009-10.
2.Subsection (1)(a) replaces the amount currently in section 35 of the Income Tax Act 2007 (ITA) to set the personal allowance for those under 65 at £6,475.
3.Subsection (1)(b) replaces the amount in section 257 of the Income and Corporation Taxes Act 1988 (ICTA) to set the personal allowance for non-resident Commonwealth citizens aged under 65 at £6,475.
4.Subsection (2)(a) disapplies the requirement under section 57 of ITA to index the basic level of personal allowance in section 35 of ITA for the 2009-10 tax year only.
5.Subsection (2)(b) disapplies the requirement under section 257C of ICTA to index the basic level of personal allowance in section 257(1) of ICTA for the 2009-10 tax year only.
6.Individuals, who meet the conditions set out in section 35 of ITA, are entitled to a personal allowance to be set against their income.
7.The provisions in ITA which provide for a personal allowance also provide for the amount, unless Parliament determines otherwise, to be increased annually by indexation. The HM Treasury order of 24 November 2008 (2008 No. 3023) which specified the indexed amount for 2009-10 tax year, is overridden by this section.
8.The table below sets out the amounts of the personal allowance for those aged under 65 for 2008-09 and the amount specified by this section for 2009-10:
| 2008-09 | 2009-10 by this section |
| £6,035 | £6,475 |
9.The effect of this section is to override the amount specified by order for the amount of the personal allowance for individuals aged under 65 and set it at an amount £130 greater than the indexed increase.
10.United Kingdom personal allowances are available for non-resident Commonwealth citizens. Section 5 of and Schedule 1 to this Act remove these allowances from 2010-11.
11.The provisions in ICTA which provide for a personal allowance for non-resident Commonwealth citizens also provide for the amount, unless Parliament determines otherwise, to be increased annually by indexation. The HM Treasury order of 24 November 2008 (2008 No. 3024) which specified the indexed amount for 2009-10 tax year, is overridden by this section.
12.The effect of this section is to override the amount specified by order for the amount of the personal allowance available to non-resident Commonwealth citizens aged under 65 and set it at an amount £130 greater than the indexed increase.
1.Section 4 applies reductions from 2010-11 to the amount of an individual’s personal allowance, where their income exceeds £100,000.
2.Subsection (1) renumbers the existing provisions in section 35 of the Income Tax Act 2007 (ITA) as new section 35(1) and provides the personal allowance for those aged under 65 including the amount, which remain unchanged.
3.New section 35(2) provides that where an individual’s adjusted net income exceeds £100,000 their personal allowance is by reduced one–half of the excess.
4.New section 35(3) provides that where the result of the application of new section 35(2) is not a multiple of £1, then the amount of the personal allowance is rounded up to the nearest £1.
5.New section 35(4) provides a signpost to the meaning of adjusted net income in section 58 of ITA.
6.Subsection (2) inserts new provisions into section 36 and section 37 of ITA which provide the higher amounts of personal allowance for those aged 65 to 74 and aged 75 and over. The higher amounts of personal allowance are reduced where an individual’s adjusted net income exceeds an income limit. Section 36(2)(b) and section 37(2)(b) of ITA currently provide for these higher levels of personal allowance to be reduced by one-half of the excess, but no lower than the basic level of personal allowance for someone under 65. The new provisions ensure an individual’s personal allowance, where they have an adjusted net income over £100,000, will be linked to the level of the personal allowance they would be entitled to if they were aged under 65.
7.Subsection (3) amends section 57 of ITA, the provision for indexation of the personal allowances following the movement of current section 35 of ITA to become new section 35(1).
8.Subsection (4) provides that the amendments made by subsection (1) and subsection (2) of this section are effective from 2010-11.
9.Subsection (5) provides that the amendment made by subsection (3) of this section is effective from 2011-12.
10.Individuals, who meet the conditions set out in section 35 of ITA, are entitled to a personal allowance to be set against their income. In 2009-10, the personal allowance for individuals aged below 65 is £6,475, £9,490 for those aged 65 to 74 and £9,640 for those aged 75 and over.
11.From 2010-11, where an individual’s adjusted net income exceeds £100,000 their personal allowance will be reduced by one-half of the excess. For example, in 2010-11 an individual with an adjusted net income of £100,002 will have their personal allowance reduced by £1.
12.The calculation of an individual's adjusted net income for the purposes of these new income-related reductions to personal allowances is provided for by section 58 of ITA; it is the same measure of income that is used for the calculation of existing income-related reductions to personal allowances for those aged between 65 and 74, and those aged 75 and over. Using adjusted net income as the measure of an individual's income will provide consistency across all the reductions that will apply to personal allowances from 2010-11.
1.Section 5 and Schedule 1 provide for the withdrawal of personal allowances and reliefs from income tax for individuals not resident in the UK who have entitlement to those allowances or reliefs solely because they are Commonwealth citizens.
2.Paragraph 1 sets out the sections in the Income and Corporation Taxes Act 1988 (ICTA) which are to be repealed in full. These cover, respectively, general provisions relating to basic and age-related personal allowances, provisions on married couple’s allowance and blind person’s allowance, provisions on payments securing annuities and the provision of allowances for non-resident individuals. Paragraphs 1(a) to (h) currently only have relevance to what is left of section 278 of ICTA, which is to be repealed by paragraph 1(i). The qualifying conditions for UK personal allowances and reliefs from income tax for non-resident persons will continue to apply as set out in section 56(3) of the Income Tax Act 2007 (ITA). The provisions for payments securing annuities continue through section 459 of ITA.
3.Paragraph 2 provides for a number of consequential amendments required to section 266 of ICTA (life assurance premiums) as a result of the changes made in paragraph 1.
4.Sub-paragraph (3) introduces new section 266(1A), which defines an eligible individual as either being resident in the UK, or, if not resident, meeting the conditions set out in section 56(3) of ITA. These conditions are that, at any time in a tax year, an individual:
is resident in the Isle of Man or the Channel Islands;
has previously resided in the United Kingdom and is resident abroad for the sake of the health of:
the individual; or
a member of the individual’s family who is resident with the individual;
is a person who is or has been employed in the service of the Crown;
is employed in the service of any territory under Her Majesty’s protection;
is employed in the service of a missionary society; or
is a person whose late spouse or late civil partner was employed in the service of the Crown.
5.Section 266 of ICTA will now no longer be available to any individual who does not also meet the conditions set out in section 266(1A).
6.Sub-paragraphs (4)-(6) remove references to section 266(7) of ICTA which relate to payments to a trade union or a police organisation. These provisions continue through sections 457 and 458 of ITA.
7.Sub-paragraph 7 removes the reference to section 278 (personal allowances for non-residents) and introduces a reference to new section 266(1A).
8.Paragraph 3 provides for a number of consequential amendments required to 274 of ICTA as a result of the changes made in paragraph 1 and for changes to section 266 of ICTA made in paragraph 2. Subparagraphs (2), (3)(b) and (5) each omit the wording of ‘other sum’ or ‘sums’ because section 274 will apply only to life assurance premiums and to no other payments (specifically, it will not apply to the sum currently referred to in section 266(7) of ICTA). Sub-paragraph 3(c) further sets out the current rate of relief on qualifying life assurance premiums at 12.5 per cent, previously set out in section 274(3)(a). Sub-paragraph 4 repeals section 274(3) which becomes otiose.
9.Sub-paragraphs 3(a) and 6 remove references to section 273 of ICTA (Payments securing widow’s and children’s annuities) which is to be repealed. The provisions continue through section 459 of ITA.
10.Paragraph 4 omits a reference to section 266(7) of ICTA in Schedule 14 of that Act as that subsection is itself now omitted by this section/Schedule.
11.Paragraph 5 provides for a number of amendments in various Taxes Acts needed as a result of repealing certain sections in ICTA provided for in paragraphs 1 to 3 of this Schedule.
12.Paragraph 6 sets out the effective commencement of the change.
13.Generally, individuals who are not resident in the UK have no entitlement to claim UK personal allowances or reliefs from income tax. However there are a number of conditions, either set out in the Taxes Acts or under Double Taxation Agreements (DTA) supported by Statutory Instrument, which allow people who are not resident and who are subject to income tax in the UK to claim personal allowances and reliefs.
14.Previously, there was an entitlement for some individuals to claim purely by virtue of being a Commonwealth citizen but by meeting no other condition. Commonwealth citizens will no longer qualify for personal allowances, married couple’s allowance, blind person’s allowance and relief for life assurance premiums by reference to their Commonwealth citizenship status alone. They may, of course, continue to qualify under the other conditions or through DTA provisions if appropriate.
15.This change will mainly affect citizens of the following countries: Bahamas; Cameroon; Cook Islands; Dominica; Maldives; Mozambique; Nauru; Niue; St Lucia; St Vincent & the Grenadines; Samoa; Tanzania; Tonga; and Vanuatu.
1.Section 6 and Schedule 2 include the provisions for an additional rate of income tax and an additional rate for dividends and consequential amendments including increases to the trust rate and dividend trust rate. There are other consequential amendments including changes to the income tax charges applying to registered pension schemes. From tax year 2010–11 there will be a new additional rate of income tax that will apply to taxable income in excess of £150,000. A new 42.5 per cent dividend additional rate will alternatively apply where dividends form part of an individual’s taxable income in excess of £150,000. This will provide three main rates of income tax: the basic rate, the higher rate and the additional rate. There will be three rates of tax applying to dividends: the dividend ordinary rate for dividends otherwise taxable at the basic rate, the dividend upper rate for dividends otherwise taxable at the higher rate and the dividend additional rate for dividends otherwise taxable at the additional rate.
2.Subsections (1) and (2) amend section 6 of the Income Tax Act 2007 (ITA) (the basic and higher rate). They add the additional rate to the main rates at which income tax is charged.
3.Subsection (3) adds a reference to the dividend additional rate in section 6 of ITA.
4.Subsection (4) amends section 9 of ITA (the trust rate and dividend trust rate) which sets out the trust and dividend rates that apply to the income of certain trusts (see background note). The trust rate will be increased to 50 per cent from 40 per cent, and the dividend trust rate will be increased to 42.5 per cent from 32.5 per cent.
5.Subsection (5) introduces Schedule 2 to this Act.
6.Subsection (6) provides that the amendments made by this section are effective for 2010-11 and subsequent years.
7.Paragraph 2 amends section 6 of ITA (the basic and higher rate) by adding the additional rate to the rates of income tax that are set by Parliament each year.
8.Paragraph 3 amends section 8 of ITA (the dividend ordinary rate and dividend upper rate). It adds the dividend additional rate to the rates of tax at which dividend income is charged.
9.Paragraph 4(2) amends section 10(3) of ITA, which provides that an individual’s income is charged to tax at the higher rate where it exceeds the basic rate limit. The amendment provides that an individual’s income is charged to tax at the higher rate up to the higher rate limit.
10.Paragraph 4(3) inserts a new section 10(3A) into ITA which provides that an individual’s income is charged to tax at the additional rate where it exceeds the higher rate limit.
11.Paragraph 4(4) inserts a new section 10(5A) into ITA which provides the amount of the higher rate limit. It is £150,000.
12.Paragraph 4(5) inserts a signpost to the provisions to increase the higher rate limit by gift aid donations and pension contributions where basic rate income tax relief is provided at source.
13.Paragraph 5(2) inserts a new section 13(2A) into ITA which provides that an individual’s dividend income is charged to tax at the dividend additional rate where it would otherwise be charged at the additional rate and is not relevant foreign income charged in accordance with section 832 of the Income Tax (Trading and Other Income) Act 2005.
14.Paragraphs 5(3) to 5(5) make amendments to section 13 of ITA consequential to the insertion of new section 13(2A).
15.Paragraph 6 amends section 414(2)(b) of ITA (relief for gifts to charity) to provide that an individual’s higher rate limit is increased by the grossed up amount of their gift aid donation.
16.Paragraph 7 provides for a consequential amendment to section 515 of ITA. Section 515 provides for the rate of tax where a charge arises on heritage maintenance settlements under section 512 of ITA. Tax is charged on the difference between the higher rate of income tax for a year and the trust rate. The amendment ensures that the rate of charge will reflect the introduction of the additional rate of tax.
17.Paragraph 8 amends section 989 of ITA (the definitions) consequential to the creation of the additional rate, the dividend additional rate and the higher rate limit.
18.Paragraph 9 amends Schedule 4 to ITA (index of defined expressions) consequential to the creation of the additional rate, the dividend additional rate and the higher rate limit and the move of the basic rate limit from section 20(2) to section 10 of ITA by Finance Act (FA) 2008.
19.Paragraph 11 amends section 192(4) of FA 2004 (relief for pension contributions at source) to provide that an individual’s basic rate limit and higher rate limit are increased by the amount of their pension contributions where they receive tax relief at source by making a claim.
20.Paragraph 12 amends section 208 of FA 2004 (unauthorised payments charge) to provide that HM Treasury may by order vary the rate of the unauthorised payments charge, and that different rates can apply in different circumstances. This charge applies to the recipient where a registered pension scheme makes an unauthorised payment. Section 208(6) already provides for the rate of the unauthorised payments charge to be increased or decreased by Treasury Order, but not that different rates can be applied. Section 208(5) provides that the rate of the unauthorised payments charge is 40 per cent of the unauthorised payment.
21.Paragraph 13 amends section 209 of FA 2004 (unauthorised payments surcharge) to provide that HM Treasury may by order vary the rate of the unauthorised payments surcharge and that different rates can apply in different circumstances. This surcharge applies to the recipient where a registered pension scheme makes an unauthorised payment or payments worth more than 25 per cent of the value of the member’s rights under the arrangement. Section 209(7) already provides for the rate of the unauthorised payments surcharge to be increased or decreased by Treasury Order. Section 209(6) provides that the rate of the unauthorised payments surcharge is 15 per cent of the surchargable unauthorised payment.
22.Paragraph 14 amends section 215 of FA 2004 (amount of the lifetime allowance charge) to provide that HM Treasury may by order vary the rate of the lifetime allowance charge. This charge applies to the recipient of benefits from registered pension schemes that cause their lifetime allowance to be exceeded. Section 215(2) provides that the rate of the lifetime allowance charge is 55 per cent (in respect of lump sum benefits) or 25 per cent (in respect of pension benefits) of the chargeable amount above the lifetime allowance. The lifetime allowance for the 2009-10 tax year is £1.75 million.
23.Paragraph 15 amends section 227 of FA 2004 (annual allowance charge) to provide that HM Treasury may by order vary the rate of the annual allowance charge. This charge applies to an individual with annual contributions or benefit accruals under a registered pension scheme that exceed the annual allowance. Section 227(4) provides that the rate of the annual allowance charge is 40 per cent of the amount that exceeds the annual allowance. The annual allowance for the 2009-10 tax year is £245,000.
24.Paragraph 16 amends section 240 (amount of scheme sanction charge) to provide that HM Treasury may by order vary the rate and applicable percentage of the scheme sanction charge. This charge applies to the administrator of a registered pension scheme that makes unauthorised payments or transactions (these are known as “scheme chargeable payments”). Section 240(1) provides that the rate of scheme sanction charge is 40 per cent. Section 240(3) provides that there is a deduction from the scheme sanction charge, which is the lesser of 25 per cent of the scheme chargeable payments, or the amount of the unauthorised payment charge paid by the person liable to it under section 208 of FA 2004.
25.Paragraph 17 amends section 242 (de-registration charge) to provide that HM Treasury may by order vary the rate of the de-registration charge. This charge applies to a scheme administrator where the tax registration of a pension scheme is withdrawn. Section 242(4) provides that the rate of the de-registration charge is 40 per cent of the value of the sums and assets held by the pension scheme immediately before de-registration.
26.Paragraph 18 provides that the powers to make regulations varying rates etc in connection with the charges applying to registered pension schemes, which are provided in the amendments to FA 2004 made by paragraphs 12 to 17 of this Schedule, are to be exercised through affirmative resolution procedures before the House of Commons.
27.Paragraph 19 introduces amendments to the Income Tax (Trading and Other Income) Act 2005 (ITTOIA) consequential to the creation of the additional rate, the dividend additional rate and the higher rate limit.
28.Paragraph 20 provides for a consequential amendment to section 640(6) of ITTOIA. Section 640 of ITTOIA sets out the amount of notional tax credit attached to certain capital payments, made by trustees to settlors, that are deemed for tax purposes to be income. A charge to tax on the settlor arises when the capital payment can be matched with undistributed income in the trust. A payment is matched first with the earlier income of the trust. The notional credit is linked to the rate of tax that the trustees have paid on the income with which the capital payment is matched. As the trust rate will increase to 50 per cent for 2010-11 onwards the amendment ensures that the notional tax credit for capital payments matched with undistributed income of 2010-11 onwards is also increased to 50 per cent.
29.Paragraph 21 provides for a consequential amendment to section 685A(3) of ITTOIA (settlor-interested settlements), which provides a notional tax credit at the higher rate for payments made to a non-settlor beneficiary of a settlor interested trust. As the trust rate will increase to 50 per cent for 2010–11 the amendment ensures that such income will in the hands of the beneficiary be treated as having paid tax at this rate.
30.Paragraph 22 amends section 669(3) of ITTOIA (reduction in residuary income: inheritance tax on accrued income) to provide that the reduction in the residuary income can be calculated by reference to the additional rate or dividend additional rate.
31.Paragraph 23 amends Part 2 of Schedule 4 to ITTOIA (index of defined expressions) consequential to the creation of the additional rate and the dividend additional rate.
32.Paragraph 24 amends section 7(5) of F(No.2)A 2005 (charge to income tax on social security pension lump sum) by adding the additional rate to the rates of tax which apply to social security pension lump sum payments. A social security lump sum is taxed at the highest rate of tax that applies on the individual's total income (excluding the lump sum). Presently these rates of tax are the basic rate and higher rate. From 2010-11, these rates of tax will include the additional rate.
33.Paragraph 25(1) provides that the powers conferred by amendments made by this Schedule can be exercised from Royal Assent for the 2010-11 and subsequent tax years. Subject to that, paragraph 25(2) provides that the amendments made by this Schedule have effect for 2010-11 and subsequent tax years.
34.For 2009-10 there are two main rates of income tax: the basic rate and higher rate. The effect of this section and Schedule is to add a further main rate of income tax – the “additional rate”. This will be introduced in 2010-11 at a rate of 50 per cent.
35.Separately section 1 to this Act introduces the charge to income tax for 2009-10 and sets the main rates of income tax at 20 per cent for the basic rate and 40 per cent for the higher rate. From 2010-11, the additional rate of income tax will be set along with the other main rates of income tax.
36.The rates of tax which apply to dividends are not set separately each year. Rather they are included in section 8 of ITA. From 2010-11 the new dividend additional rate introduced by the section will be 42.5 per cent and will apply where dividends form part of an individual’s taxable income in excess of £150,000.
37.The trust rate of tax is the rate of tax paid by trustees that generally applies to the income of discretionary or accumulation trusts. Trustees are liable to tax on income received at the trust rate of tax, but dividends and other similar income are chargeable at the dividend trust rate.
38.All income paid to the beneficiaries of discretionary or accumulation trusts that are not settlor interested carries a credit at the trust rate, so the payment is treated as if it had been made after the deduction of tax at that rate. Beneficiaries will be able to reclaim tax where the trust rate exceeds the rate of tax at which their income is chargeable. Different rules apply where the trust is settlor interested. The payment is not grossed up but notional tax is provided to the beneficiary.
1.Section 7 charges corporation tax for the financial year beginning 1 April 2010 and sets the main rate of corporation tax at 30 per cent on ring fence profits of North Sea oil companies and 28 per cent on the profits of other companies.
2.Subsection (2) sets the charge and the main rates of corporation tax for the financial year 2010.
3.The main rate of corporation tax is paid by companies with profits of more than £1,500,000 (the upper profits limit).
4.Where two or more companies are associated with one another, the profits limit is reduced. This is done by dividing the limit by the number of associated companies.
5.Companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf (‘ring fence profits’) will continue to be subject to a separate main rate of corporation tax applicable to those ring fenced profits. Profits from activities which are not ring fenced will continue to be charged at the main rate of corporation tax applicable to all other profits.
1.Section 8 sets the small companies’ rate of corporation tax for the financial year beginning 1 April 2009 at 21 per cent for all profits apart from “ring fence profits” of North Sea oil companies and 19 per cent for “ring fence profits”. Additionally, it sets the fraction used in calculating marginal small companies’ relief from the main rate at 7/400 for all profits apart from “ring fence profits” and 11/400 for “ring fence profits”.
2.Subsection (1) sets the small companies’ rate of corporation tax for the financial year 2009.
3.Subsection (2) sets the fraction used to calculate marginal small companies’ relief.
4.Subsection (3) provides that where a company makes a claim for marginal small companies’ relief in respect of an accounting period, part of which falls in the financial year 2009, or any subsequent financial year and its profits for that accounting period consist of both ring fence and other profits, then its claim to marginal small companies relief under section 13(2) of the Income and Corporation Taxes Act 1988 (ICTA) is modified appropriately. The conditions for this modification are laid out in subsections (3) to (7) of Section 3 of Finance Act 2007.
5.Companies with profits up to £300,000 pay corporation tax at the small companies’ rate.
6.Companies with profits between £300,000 and £1,500,000 (the lower and upper limits) benefit from small companies’ marginal relief from the main rate.
7.Marginal relief has the effect of gradually increasing the rate of tax for a company as its profits move from the lower to the upper profits limit.
8.The example below illustrates the effect of marginal relief for a company with taxable non-ring fence profits of £500,000. Its tax liability is calculated as follows:
| * £1,000,000 is the difference between the upper limit and the profit. | |
| £500,000 @ 28 per cent | £140,000 |
| minus 7/400 of £1,000,000* | £17,500 |
| Tax payable: | £122,500 |
9.The example below illustrates the effect of marginal relief for a company with taxable ring fence profits of £500,000. Its tax liability is calculated as follows:
| * £1,000,000 is the difference between the upper limit and the profit. | |
| £500,000 @ 30 per cent | £150,000 |
| minus 11/400 of £1,000,000* | £27,500 |
| Tax payable: | £122,500 |
10.Where two or more companies are associated with one another, the profits limits are divided by the number of associated companies.
1.Section 9 provides for the standard rate of VAT to revert to 17.5 per cent on 1 January 2010. Section 9 and Schedule 3 introduce a supplementary charge to VAT of 2.5 per cent on certain supplies that span the date on which the standard rate of VAT changes from 15 per cent to 17.5 per cent. They also make minor amendments to the VAT Act 1994 (VATA) provisions about orders effecting a temporary change in the VAT rate.
Finance Act 2009 