Emergency Budget Report June 2010
In his first Budget, the Chancellor gave us an overview of the future of the tax system over the next few years. Full details will follow later, however some key points are below:
Income tax, national insurance and benefits
There are no major unexpected changes to income tax or national insurance, but the benefits system is being overhauled. The limits for relief for pension contributions will be reduced from April 2011.
Capital gains tax
The bad news is that capital gains tax for higher rate taxpayers has been increased from today to 28%, though this isn’t as high as some of the forecasts. There is good news for entrepreneurs, where gains up to £5million on the disposal of their business will now be taxed at 10%.
VAT
The increase of VAT to 20% is likely to be the most significant change for many people, though hardly unexpected. As it does not come in to 4 January 2011 there is time to plan for this.
Taxation of businesses
As expected rates are being reduced for both large and small companies. Against this capital allowances are being reduced from 2012 which will offset this for some businesses. This will be especially unwelcome for sole traders and partnerships spending more than £25,000 a year on plant and equipment.
Tax avoidance
As customary, anti avoidance measures are highlighted. One proposal disclosed in the supporting documentation is the intention to consult on a general anti avoidance rule.
For further details, please click on the link below which will open the full PDF document.