Finance Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Charges, rates, allowances, etc
1

A
Bill
[AS AMENDED IN THE COMMITTEE AND IN PUBLIC BILL COMMITTEE]
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.
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:—
Part 1
Charges, rates, allowances, etc
Income tax
1
Charge and main rates for 2009-10
(1)
Income tax is charged for the tax year 2009-10.
5
(2)
For that tax year—
(a)
the basic rate is 20%, and
(b)
the higher rate is 40%.

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Finance Bill
Part 1 — Charges, rates, allowances, etc
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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.
5
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”.
10
(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,
15

(indexation) do not apply for the tax year 2009-10.
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—
20
“(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.
25
(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
30
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.
35
(5)
The amendment made by subsection (3) has effect for finding allowances for
the tax year 2011-12 and subsequent tax years.
5
Abolition of personal reliefs for non-residents
Schedule 1 contains provision abolishing personal reliefs for non-residents.

Finance Bill
Part 1 — Charges, rates, allowances, etc
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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.”
5
(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%”.
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(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
15
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.
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(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).
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
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(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
30
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
35
12 of ICTA (see section 502(1) and (1A) of that Act).

Finance Bill
Part 1 — Charges, rates, allowances, etc
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Value added tax
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
5
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
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rate of value added tax (see Part 6).
Stamp duty land tax
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—
15
(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
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“£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
25
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
11
Rates of alcoholic liquor duty
30
(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)—
35
(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”,

Finance Bill
Part 1 — Charges, rates, allowances, etc
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(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
(5)
For the table in Schedule 1 substitute—
                  “Table of rates of duty on wine and made-wine
             Part 1
                     Wine or made-wine of a strength not exceeding 22 per cent


Rates of duty per

10

Description of wine or made-wine
hectolitre

£

Wine or made-wine of a strength not
65.94

exceeding 4 per cent

Wine or made-wine of a strength exceeding
90.68

15

4 per cent but not exceeding 5.5 per cent

Wine or made-wine of a strength exceeding
214.02

5.5 per cent but not exceeding 15 per cent

and not being sparkling

Sparkling wine or sparkling made-wine of a
207.20

20

strength exceeding 5.5 per cent but less than

8.5 per cent

Sparkling wine or sparkling made-wine of a
274.13

strength of 8.5 per cent or of a strength

exceeding 8.5 per cent but not exceeding 15

25

per cent

Wine or made-wine of a strength exceeding
285.33

15 per cent but not exceeding 22 per cent

     Part 2
30
                          Wine or made-wine of a strength exceeding 22 per cent


Rates of duty per litre

Description of wine or made-wine
of alcohol in wine or

made-wine

£

35

Wine or made-wine of a strength exceeding
              22.64”.

22 per cent

(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
40
liquors, and

Finance Bill
Part 1 — Charges, rates, allowances, etc
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(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.
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Rates of tobacco products duty
5
(1)
For the table in Schedule 1 to TPDA 1979 substitute—

“Table

1.  Cigarettes
An amount equal to 24 per cent of

the retail price plus £114.31 per

10

thousand cigarettes

2.  Cigars
£173.13 per kilogram

3.  Hand-rolling tobacco
£124.45 per kilogram

4.  Other smoking tobacco
£76.12 per kilogram”.

and chewing tobacco

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(2)
The Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order
2008 (S.I. 2008/3026), so far as relating to excise duty on tobacco products, is
revoked.
(3)
The amendments made by this section are treated as having come into force at
6 pm on 22 April 2009.
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Vehicle excise duty
13
Rates for 2009-10
(1)
Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.
(2)
In paragraph 1 (general)—
(a)
in sub-paragraph (2) (vehicle not covered elsewhere in Schedule
25
otherwise than with engine cylinder capacity not exceeding 1,549cc),
for “£185” substitute “£190”, and
(b)
in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with
engine cylinder capacity not exceeding 1,549cc), for “£120” substitute
“£125”.
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(3)
In paragraph 1B (graduated rates for light passenger vehicles), for the table

Finance Bill
Part 1 — Charges, rates, allowances, etc
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substitute—
“Table

CO2 emissions figure
Rate

(1)
(2)
(3)
(4)

   Exceeding
Not exceeding
  Reduced rate
Standard rate

5

g/km
g/km
£
£

           100
          120
            15
            35

           120
          140
           100
           120

           140
          150
           105
           125

           150
          165
           130
           150

10

           165
          185
           155
           175

           185
          225
           200
           215

           225
           —
           390
           405

   The table has effect in relation to vehicles first registered under this Act before
23 March 2006 as if—
15
(a)
in column (3), in the last row, “200” were substituted for “390”, and
(b)
in column (4), in the last row, “215” were substituted for “405”.”
(4)
In paragraph 1J (light goods vehicles)—
(a)
in sub-paragraph (a) (vehicle which is not lower-emission van), for
“£180” substitute “£185”, and
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(b)
in sub-paragraph (b) (lower-emission van), for “£120” substitute
“£125”.
(5)
The amendments made by this section have effect in relation to licences taken
out on or after 1 May 2009.
14
Rates from April 2010
25
(1)
Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.
(2)
In paragraph 1(2) (vehicle not covered elsewhere in Schedule otherwise than
with engine cylinder capacity not exceeding 1,549cc), for “£190” substitute
“£205”.
(3)
Paragraph 1B (graduated rates for light passenger vehicles) is amended as
30
follows.
(4)
For “table” substitute “tables”.
(5)
Omit the “and” at the end of paragraph (a).