Budget 2009 Introduction Personal Income Tax Tax Credits National Insurance Contributions Employees Savings Capital Gains Tax Inheritance Tax Stamp Duty Land Tax Corporation Tax Business Tax Value Added Tax Other Measures Tax Tables National Insurance

Savings Pension contributions (Table B) For the current tax year, 2009/10, pension contributions will be relieved as in past years, with expected increases in the maximum amounts of contributions and tax-free funds at retirement. Tax relief will be restricted for the highest earners - those with incomes over £150,000 - from April 2011: instead of the current relief at the marginal rate of 40%, the relief will be tapered to 20%, the same level of relief that basic rate taxpayers receive, by the time income reaches £180,000. There will be measures to stop people on very high earnings paying unusually large contributions to take advantage of the greater relief in advance of the change: if someone with earnings over £150,000 pays contributions that are greater than £20,000 and greater than the regular contributions paid in previous years between 22 April 2009 and 5 April 2011, there will be a supplementary tax charge which will have the effect of cutting the tax relief to 20%. Tax Tip Review pension contributions but watch the anti-avoidance rule. Individual Savings Accounts The limit for investment in tax-free ISAs increases from £7,200 to £10,200. This higher limit will apply from 6 October 2009 for people aged 50 and from 6 April 2010 for everyone else. Up to £5,100 can be invested in cash ISAs. As before, the balance has to be invested in stocks and shares. Venture capital schemes Minor but significant changes have been made to the Enterprise Investment Scheme, which encourages investment in unquoted trading companies. It has been necessary for the company to use 80% of the money raised within one year of the share issue and the remainder within two years. This is relaxed so that the whole of the money must be spent within two years. Up to 21 April 2009, half of an EIS investment in the first half of a tax year could be "carried back" for tax relief in the previous year. From 22 April 2009 onwards, the whole of any qualifying EIS investment made up to 5 October in the tax year can be relieved in the preceding year. The Corporate Venturing Scheme and Venture Capital Trusts enjoy the same relaxation in the time limit for spending the money raised from share issues. Foreign dividends Individuals who receive dividends from UK companies enjoy a 10% tax credit which is added to the net amount received to give the taxable income. The tax credit is then set against the tax liability, which means that a basic rate taxpayer has nothing to pay and a higher rate taxpayer pays 22.5% of the gross amount - equivalent to 25% of the net dividend. In April 2008, the tax credit rule was extended to recipients of dividends from foreign resident companies as long as they owned less than 10% of the shares. These rules will now be extended to holders of 10% of the shares and above, as long as the country in which it is resident has a system of tax on profits similar to corporation tax. The rule will also apply to all dividends from offshore funds, unless they hold more than 60% of their investments in interest-bearing assets, in which case the distributions will be taxed as interest.