Emergency Budget - further information from the final coalition document
Reading the introduction to the final document one phrase gave me a moment of panic "we have both agreed to sweeping reform of ... taxes...". No please not again - not a whole new set of legislation that will make our tax code (already the longest in Europe) even bigger! The good news followed - with a commitment to cutting red tape - no new regulations without a cut of an existing regulation - query - is law a regulation?
- There is a commitment - as announced at the CBI - to reduce the corporate tax rate and at the same time simplify reliefs and stopping avoidance;
- The Dyson report (which among other matters proposed higher rates of R&D relief) will be considered with an emphasis for R&D relief for hi-tech companies, small firms and start ups. I have to say the refocus worries me a bit - defining high-tech is never easy!
- A 'substantial' increase in personal allowances from April 2011 with an ultimate aim of an allowance of £10,000
- Increased NIC thresholds and no increase in the employers' rate - sadly the individual increase already announced by the previous government will go ahead
- The Conservative manifesto pledge to introduce tax breaks for married couples will be raised but the Liberal democrats are permitted to abstain from voting (so it looks unlikely to happen)
- Changes to capital gains tax so that non-business assets are taxed at rates similar to income tax rates but with 'generous' exemptions for entrepreneurial business activities
- Further work on tax avoidance
- Changes promised (?) on environmental taxes, furnished holiday lettings and non-domiciled individuals
- There are though some notable omissions from the document - principally VAT and tax relief on pensions - is that good news - or not?
What should you do between now and 22 June - certainly look at gains on non-business assets, possibly top up pension contributions, look at R&D claims and if you do have any planning in hand you may want to close it out before the Budget.
If you have any queries or would like to discuss the position on planning please contact us.
We will be blogging on SME Plus Blog and Tax Plus Blog on Budget day. If you do not already subscribe to our blogs click here for SME Plus Blog or here for Tax 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: 20th May, 2010
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