Budget 2010 - tax planning
Courtesy of the general election it looks highly likely that we will have two Budgets this year. If Labour were to be returned to power there may be some additional measures they would need to take while if the Conservatives were to win they would wish to implement their own policies as soon as possible. A hung Parliament would almost certainly mean a dilution of either party's plans to appease their power-sharing colleagues. It brings to mind Robert F Kennedy's speech - "There is a Chinese curse which says, '"May he live in interesting times." Like it or not, we live in interesting times..."
So where does all of the speculation leave us in terms of tax planning?
We know the tax rates for this year almost certainly - we are confident of this at least until Budget Day (24th March). For next year we know the likely income tax rates if Labour win the election and, as yet, there is no indication that the Conservatives would seek to reverse personal tax increases. On that basis the advice would still seem to be if you are planning a dividend or bonus over the next few months and can pay it before 5 April - it may well be sensible so to do.
Just a word of caution - remember the impact of higher income on pensions.
There seems to be widespread belief that capital gains tax will have to go up from the current 18%. Again if you have an asset for sale it may be worth bringing this forward to the current tax year if this is commercially possible.
To be honest - the only we can guarantee is that any new Government needs more money and spending cuts alone are unlikely to be enough so taxes look almost certain to go up. The next few months could prove very interesting!
We will be blogging on Tax Plus Blog and SME Plus Blog on Budget day. If you do not already subscribe to our blogs click here for Tax Plus Blog or here for SME Plus Blog to ensure you get our comment and analysis as and when it happens.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.
Date: 15th March, 2010
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