Pre-Budget Report 2009 Introduction Personal tax Tax rates and allowances Furnished holiday lettings Pensions and Credits State Pension Rates of tax credit National Insurance Contributions Rates and limits: 2010/11 Rates and limits: 2011/12 Employees Bankers' bonuses Electric cars and vans Cars up to 2012 Car fuel Works canteen Savings Pension contributions Capital Gains Tax Annual exemption and rate Inheritance Tax Rates and threshold Stamp Duty/Stamp Duty Land Tax Extended holiday ends Corporation Tax Rate of tax Business Tax Bank payroll tax Capital allowances Research and development Time to pay Empty property rates relief Value Added Tax Standard rate Flat rate Other Measures Equitable liability Offshore disclosure opportunity Public sector pay and pensions Tax avoidance

Furnished holiday lettings As announced in the April 2009 Budget, the favourable treatment of furnished holiday lettings (FHL) will cease from 6 April 2010. Property rental is normally treated for tax as an investment activity, which restricts the offset of losses against other income, the use of the earnings for pension contributions, and the availability of a number of capital gains tax reliefs. Lettings which met the conditions for FHL enjoyed a much more favourable treatment. The law used to restrict these FHL advantages to UK properties only. When the Government realised that this was contrary to European law, it had to extend the good news to properties anywhere in the European Economic Area - but then decided to abolish the treatment altogether from 6 April 2010 (1 April for companies). It will still be permissible to set running expenses against the income from all UK rents, but it will not be possible to set a net loss from FHL against income from other sources. Entrepreneurs' Relief reduces the effective rate of CGT on sales of business assets from 18% to 10% for the first £1m of gains. It has been available for disposals of FHL either on the cessation of the rental business or within 3 years after cessation. HM Revenue & Customs have confirmed that the change of the rules on 6 April 2010 will be treated as "ceasing the trade" for this purpose: this means that the FHL property can still be sold within the 3 years following 5 April 2010 at a CGT rate of 10%. After that, the normal rate of CGT will apply.