Budget 2010 – tough but fair
The Chancellor announced that he was going to be tough but fair in the budget today.
Everyone will have their own views on this. In particular public sector workers, who will feel most hard done by.
The main points for businesses and business owners are:
1. VAT is up to 20% from January next year.
2. Capital gains tax for higher earners will be up to 28% from midnight tonight (so stilll time to act!). When dealing with trustees and personal representatives care needs to be taken when considering in whose hands any gains are realised.
3. Entreprenuers’ Relief for business assets (most significantly 5% or more shareholdings in trading companies) reducing CGT to 10% will remain and in fact will apply to the first £5m of gains realised over the seller’s lifetime.
4. Capital allowances – the annual investment allowance will be cut to £25k.
5. The announced increases to tax on cider will be scrapped.
6. Corporation tax will be reduced over time. The main rate will be reduced over time to 24%.
7. A bank tax. Details are to be announced but the expected take from this is a couple of billion GBP. The Chancellor mentioned that Germany and France will announce similar measures.
There will be quite a few sales going through tonight to take advantage of the few remaining hours of 18% CGT.
We can also expect to see a rush to get purchases through (in particular of commerical property and of VATable assets by banks and financial institutions) before January’s VAT increase.
As I sit down to review the pages of press releases and budget notes, it occurs to me that nothing in this is totally unexpected and that (so far as CGT is concerned, at least) it could have been worse.
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Something I noticed tucked away in one of the notices is that there is a consulation on introducing a General Anti-Avoidance Rule for tax. The Treasury state:
“As part of an approach to develop sustainable responses to avoidance risk, the Government intends to examine whether the option of a General Anti-Avoidance Rule should form one element of strengthened defences. This will be part of wider work on improvements to the tax policy-making process.”
That could certainly change the landscape for tax planning if they go too overboard. It will also be interesting to see whether having a Conservative-Lib Dem government will impact on the approach to such consulations. Under Labour, a consultation was generally viewed as a statement of intent and it didn’t tend to matter what submissions were made. Let’s hope that this government is genuinely interested the views of the “small people”, to use a BPism.I think this comment should be removed
Oh, so sneaky. Followers of my blog will recall that there was talk of an increase to Insurance Premium Tax (IPT). See here: http://www.mablaw.com/2010/06/insurance-premiums/ (complete with a cute picture).
Well this announcement was drowned out in the excitement about VAT. This increase will take place with effect from 4 January 2011, meaning that next year’s premiums will be even higher.
With effect from 4 January 2011 the standard rate of Insurance Premium Tax will increase to 6 per cent and the higher rate will increase to 20 per cent.I think this comment should be removed