Name and shame deliberate tax defaulters

HM Revenue and Customs will be able to publish the names and details of individuals and companies who are penalised for deliberate defaults which lead to tax owed of more than £25,000. Those that make full unprompted disclosure to HM Revenue and Customs may well avoid this.

Changes to capital allowances on cars bought by the business change

From April 2009 the annual capital allowances for cars will be dependent on the level of CO₂ emissions for the car rather than just the cost.  Cars below 110 gm/km will continue to be entitled to a full 100% first year allowance, between 110-160 gm/km will get an annual allowance of 20% whereas cars in excess of 160 gm/km will only qualify for 10% in a special rate pool.

The changes add further complexities to already complex rules, making it more difficult for business owners to make informed decisions. For example, businesses purchasing cars costing more than £30,000 and over 110 g/km CO₂ may well be better off under the new rules. However if the car is likely to fall drastically in value and perhaps not be owned for too long, then the changes are going to be costly. Motorcycles are excluded from the definition of cars and will not be subject of the new rules, but will qualify for the 100% Annual Investment Allowance.

Tip: Cars with low emissions may be a very cheap way of providing family members with cars whilst saving tax. It is surprising what cars have low emissions. A list of cars can be found at www.comcar.co.uk.

No mention of income shifting, but disposing of income streams are taxable.

Whilst there was no mention of the previous income shifting rules mentioned, the Budget notices included reference to the disposal of income streams. If companies, partnerships or individuals dispose of the right to future income streams without disposing of the underlying asset then the proceeds will be taxed as income. Although in some circumstances this is already the case, the proposed changes are to be more comprehensive.

Investment limits for Individual Savings Accounts (ISA's) increase

The amounts that can be invested into ISA's will increase to £10,200 per tax year, of which up to £5,100 can be saved as cash.

This will increase the amount an individual can save without suffering income tax or capital gains tax on their investment.  For those aged 50 or over before 6^th April 2010, the new limits will apply from 6^th October 2009.

For everyone else the new ISA investment limits will apply from 6^th April 2010.

Tip: As anyone 16 or over can open an ISA and earn interest tax free it is well worth older children considering opening an account.