The CBI argues that decreasing the deficit should be done by controlling spending rather than increasing taxes.   Specific points made by them include:

• The CBI wants to see a broad definition of business assets (which would benefit from tax relief) to prevent disincentives to investment or start-ups, and the tax should be structured to minimise the impact on long-term investment.
• The CBI is encouraged by the Dyson commission’s support for the R&D tax credit and urges the Government to retain it in its current form.
• Changes to tax treatment of pensions, planned to come into force from April next year, are unnecessarily complex and expensive to administer, and in their current form would make it harder for UK businesses to attract and retain global talent.

Undoubtedly, their concerns are echoed across the country.  I have spoken with many clients concerned about their own position if capital gains tax increases on 22 June.  Whilst there are steps which can be taken prior to then, the time for doing so is getting increasingly tight.

If you want to speak to an advisor about CGT increases please call 01923 202020.

I’ve just seen a great article in the Times here. Alice Thompson makes a strong case why Mr Osborne’s proposed rise in the rate of CGT is poorly judged and counter productive. It seems to me that it will be even more damaging if the increases take effect on 22 June as opposed to on 6 April next year, since this will not give people the chance to take steps to reduce their exposure and will be seen as incredibly unfair.

If you are concerned about the effects of the emergency budget on you, please contact one of our tax team who will be happy to discuss the options open to you.

This is the first Budget of the new Government and will be the first Budget where the Office of Budget Responsibility, also announced today, will provide the forecasts for the economy and public finances.

The most concerning tax measures we may hear about are:

• Changes to CGT – possibly increasing the rate to up to 50% for high earners.
• Increase of the rate of VAT – up to an expected 20%.

In terms of CGT, if you hold an asset which currently stands at a gain, and which you would consider disposing of in the short to medium term,  you need to consider whether you should take action before 22 June to secure tax at 18%.

It may be possible to crystalise a gain even if you don’t have a buyer lined up, although this needs careful consideration, please let me know if you would like to discuss this.

Look out for Budget # 2, but these are some of the points I’ve culled from the papers today:

• The Lib-Dem’s headline reform of increasing the lower tax threshold to £10k will be introduced.
• The rate of capital gains tax (CGT) on the disposal of non-business assets will increase.  We will therefore have two rates.   It remains to be seen how this will operate in practice but we are likely to see the rates of tax for income and capital being matched – with the top rate of CGT at 40 or 50 per cent.  People thinking of making taxable disposals (in particular making gifts and settling trusts) should seriously consider accelerating these.  
• There will be a lower rate of CGT, or an exemption (a la business assets taper or entreprenuers’ relief) for entrepreneurial assets.  This is unlikely to cover shares other than in your own business (which could mean 5% ownership – but this remains to be seen).
• A reversal of the increase in the threshold for national insurance contributions made by employees.
• The tax break for married couples will go ahead, but it is not likely to be big enough to cover the cost of the engagement ring (or even the mangagement ring).  The Lib-Dems have not agreed to support this but they’ve agreed not to block it.
• Plans to increase the inheritance tax threshold to £1m are deferred indefinately.