Most of you will be aware that on Monday the man with the bushy eyebrows, or Chancellor Alistair Darling, announced his 2nd pre-budget report and I thought it would be helpful to outline how it might affect you.
The main tax proposals are:
- Reduction in standard rate of VAT from 1 December 2008
- Changes to personal allowances including prospective reduction in the basic personal allowances for individuals with income above £100,000
- A prospective new income tax rate of 45%
- Deferral of the planned increase in small company corporation tax rate
- New loss carry back provisions
- Details of changes to capital allowances for cars.
As a freelancer / consultant, if you have your own Ltd company and are VAT registered; VAT from Monday the 1st of December will reduce from 17.5% to 15% until the 31st of December 2009, at which point it will revert back to 17.5%, therefore all invoices you raise from Monday should have VAT calculated at 15%.
The 15% rate will apply to:
- Supplies of goods and services
- Imports
- Acquisitions of goods from other EC member states
- For more details of changes to the Flat rate scheme
The small companies corporation tax rate, which applies to companies with up to £300,000 of profits, increased from 20% to 21% from 1 April 2008. The intention was to increase this rate to 22% in 2009 but this has been deferred until 1 April 2010.
For a full break down provided by the brilliant people at LAWRENCE & CO