Budget 2008 Introduction Personal Taxation Employee Taxation Investment Reliefs Capital Gains Tax Trusts Tax Credits National Insurance Contributions Inheritance Tax Business Tax Corporation Tax Value Added Tax Stamp Duty Insurance Premium Tax

Business Tax Businesses in general pay PAYE in respect of their employees, and VAT on turnover if they are required to be registered for that tax. Unincorporated businesses (sole traders and partnerships) pay income tax and NIC on their profits; companies pay corporation tax on all their profits including capital gains.   Capital allowances Neither capital expenditure nor depreciation is generally allowed as an expense. Instead, many classes of capital expenditure receive a capital allowance, which may spread the cost over several years, and which is not related to the accounting depreciation. The major categories of capital allowance in 2008/09 are: Plant and machinery * approved energy saving plant 100% * first £50,000 expenditure per year 100% * general: writing down allowance on residue of expenditure 20% * long life assets 10% * features integral to buildings 10% Cars * general: writing down allowance (max £3,000pa) 20% * low emission cars (rating up to 110g/km) 100% Research and development: capital equipment 100% Buildings (excluding land value) * industrial buildings: straight line allowance 3% * agricultural buildings, qualifying hotels 3% * enterprise zone commercial buildings in first year 100% * enterprise zone buildings if 100% not claimed 18.75% The above buildings allowances are being phased out by 2011. * converting vacant space over commercial premises into flats 100% Know-how and patent rights (not corporation tax) 25% Different rules for corporation tax Certain categories of capital expenditure by companies are treated differently. New expenditure on 'intangible assets', including goodwill, know-how and patent rights, is in general relieved for tax according to the accounting treatment (i.e. depreciation). There are increased allowances for companies which clean up contaminated land or carry out R&D work - the expenditure is uplifted for tax purposes, effectively creating a grant for doing the work. The uplift is 50% for land remediation and for small/medium company R&D, and 25% for large company R&D. The R&D rates are to increase in 2008 once EU approval is granted.