Trust rate

The trust rate will be increased from 40% to 50% and the trust dividend rate from 32.5% to 42.5%. These changes will take effect from 2010/11 and will apply to all trust income.

National Insurance Contributions (NICs)

The NIC thresholds have been increased but the rates of Class 1 and 4 contributions have been held at their 2008/09 levels.

An increase in the rates of national insurance is proposed from April 2011. An increase of 0.5% will apply to the rates applicable to employers’, employees’ and the self-employed.

Foreign dividends

Individuals in receipt of foreign dividends are generally entitled to a non-repayable tax credit of one ninth of the distribution. This treatment applies to individuals who own less than a 10% shareholding in the company.

From Budget Day individuals with shareholdings in excess of 10% will also be eligible for the non-repayable tax credit. The tax credit will not be available where the source country is not a qualifying territory. A qualifying territory is one which has a double taxation agreement with the UK, with a non-discrimination article. Anti-avoidance measures will be introduced to ensure these new rules are not subject to abuse.

Individuals in receipt of distributions from offshore funds will also be eligible for the non-repayable dividend tax credit regardless of the percentage shareholding.