*As announced at the 2008 Pre-Budget Report

As announced at the 2008 Pre-Budget Report the personal allowance for under 65s will increase above indexation to £6,475.

Age related allowances have been increased in line with inflation to £9,490 for people aged between 65-74 and to £9,640 for those aged 75 and over. This will mean that in 2009-10 no one aged 65 or over need pay tax on an income of up to £183 a week.

The basic rate of tax will remain at 20p, and the higher rate of tax will remain at 40p.

The capital gains tax (CGT) annual exempt amount increased in line with statutory indexation to £10,100 for the tax year 2009-10 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees is increased to £5,050.

Every husband, wife, civil partner and child has his or her own £10,100 annual exempt amount.

For capital gains above the annual exempt amount the CGT rate for 2009-10 will continue to be 18 per cent.

There is currently a one ninth non-payable dividend tax credit available for UK individuals receiving dividends from UK resident companies or from shareholdings of less than 10 per cent in foreign companies. For these individuals, higher rate taxpayers are liable to tax at 32.5 per cent but in practice only pay 25 per cent (of the net dividend) because part of the tax liability is covered by the tax credit. Basic rate taxpayers are liable to tax at 10 per cent but in practice do not pay any tax on dividends from UK companies because the tax liability is entirely covered by the tax credit.

As announced at Budget 2008, the non-payable dividend tax credit will be extended from 22 April 2009 to investors with a shareholding of 10 per cent or more in a non-UK resident company, unless the source country does not levy a tax on corporate profits similar to corporation tax. The credit will also be extended to all dividends from offshore funds, except for distributions from offshore funds with more than 60 per cent of interest bearing assets, which will be taxed as interest.

As announced at the 2008 Pre-Budget Report, the child element of the Child Tax Credit (CTC) increased by £75 above average earnings indexation. This included the Government’s commitment to increase the child element by £50 above indexation in April 2009, and also brought forward the Government’s commitment to increase the child element by £25 above indexation in April 2010 to April 2009. The elements for disabled children and severely disabled children increased in line with inflation. The family element and baby addition

remain unchanged.

As announced at the 2008 Pre-Budget Report, the income threshold for receiving maximum CTC only increased to £16,040, equivalent to the effective threshold for lone parents and couples receiving both WTC and CTC. The threshold for receiving maximum WTC remains at £6,040, and the threshold for receiving maximum family element of CTC remains at £50,000. The withdrawal rate for the family element remains at 6.67%, and for the rest of tax credits at 39%. The disregard for changes in income during the tax year remains at £25,000.

At Budget 2008, it was announced that in April 2009 the Child Benefit eldest/only child rate would increase above inflation to £20.00, and the rate for other children would increase in line with inflation to £13.20. At the 2008 Pre- Budget Report, these rises were brought forward from April 2009 to January 2009.

Tax relief for business expenditure on cars

New rules for tax relief for business expenditure on cars were announced on 1 April. These take effect from 1 April 2009 for businesses in the charge to Corporation Tax and 6 April 2009 for businesses in the charge to Income Tax. The rate at which qualifying expenditure on cars can be written down against profits will depend on the car's CO2 emissions. Expenditure on cars with CO2 emissions exceeding 160 g/km will be allocated to the special rate capital allowances pool and attract 10% writing-down allowance (WDA). Expenditure on cars with CO2 emissions of 160g/km or less will attract 20% WDA in the main plant and machinery pool. The associated rules which disallow a proportion of car lease rental payments have also been amended in line with the new capital allowances rules.