Hall Accountancy Services Limited

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We have highlighted key changes below.

For more details click here

For tables of rates and allowances for 2004/05 and 2003/04 click here

For tables of rates and allowances for 2005/06 and 2004/05 click here

KEY CHANGES

COMPANIES / EMPLOYERS

This has been a low key budget with only a few announcements relevant to small companies, these being:

• Increase in thresholds for national insurance
• Amendment to benefit in kind rules on employer provided computers and bicycles
• Increase in VAT registration and deregistration limits
• Increase in VAT fuel scale charges

INDIVIDUALS

• Personal allowance is to be increased
• Increase in 10% and 22% tax rate bands
• Amendment of benefit in kind rules in relation to vans
• Stamp duty threshold for residential properties has doubled
• Current ISA limits of £7,000 overall (£3,000 for cash) to be retained until 5 April 2010
• Increase in the threshold for inheritance tax
• The Revenue given powers to tax civil partners in the same way as married couples when the Civil Partnerships Act comes into force from 5 December 2005

MORE DETAILS

COMPANIES / EMPLOYERS

National insurance

No increase in the rates of national insurance have been announced but the earnings levels have increased slightly. Click here for full details of relevant rates and allowances.

Corporation tax rates

No changes in corporation tax rates have been announced.

Benefit in kind rules

An amendment has been made to ensure that no tax charge arises where employees buy previously loaned computers or bicycles from their employer at market value.

VAT

VAT registration threshold has been increased to £60,000 and the deregistration limit to £58,000.

VAT fuel scale charges applied by businesses in order to calculate the amount of VAT due on the consumption of private motoring are increased to reflect changes in fuel prices from 1 May 2005. The new rates for a 3 month period being as follows:

Cylinder capacity of vehicle Scale charge diesel £ Vat due per car £ Scale charge other £ VAT due per car £ 1400 or less 236.00 35.15 246.00 36.64 1401 to 2000 236.00 35.15 311.00 46.32 2001 or more 300.00 44.68 457.00 68.06

INDIVIDUALS

Income tax

The starting rate, basic rate and higher rate are unchanged on the previous year.

Personal allowances

The tax free allowance for all individuals has increased slightly along with the 10% and 22% bandwidths.  Click here for relevant rates and allowances.

Employer provided vans

From 6 April 2005 employees will have no tax to pay if:

• the only journeys made in the van are work journeys or
• all the journeys are work journeys and travelling between home and work

Employees will only pay tax if they use their van for private journeys other than travelling between home and work, unless this other private use is insignificant.  For example, taking rubbish to the tip once or twice a year, or regularly making a slight detour to stop at a newsagent on the way to work.

If there is tax to pay because of private use employees will be charged tax on the following amounts:

2005-06 £500 reduced to £350 if the van is over 4 years old 2006-07 £500 2007-08 £3,000 with tax on an extra £500 if they have free or subsidised fule for private use

Employers will pay Class 1A NIC’s on the same amounts

Stamp duty

The threshold for stamp duty for residential properties has increased to £120,000 from 17 March 2005.

Inheritance tax

Threshold for inheritance tax will increase as follows:

2005-06 £275,000 2006-07 £285,000 2007-08 £300,000

Civil partnerships

This measure will significantly improve the tax position of many same-sex couples by treating civil partners in the same way as married couples. The measure takes effect from 5 December 2005, when the Civil Partnerships Act 2004 comes into effect.  They will be entitled to exemptions such as:

• the exemption from capital gains tax on transfers of assets between spouses
• the complete exemption from inheritance tax on lifetime transfers of assets between spouses, and on amounts left to a spouse.
• for older couples with appropriate incomes, the married couple’s allowance may be available

There are also some potential tax disadvantages for same-sex couples who enter into civil partnership, which should also be considered carefully:

• only one of the couples homes will qualify for Principal Private Residence relief.  (it will therefore be necessary to consider making elections for one house to qualify)
• certain anti-avoidance provisions will apply including in relation to income from businesses.

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