Emergency Budget 2010 Summary
BY GEORGE, IT’S THE EMERGENCY BUDGET
The Chancellor opened his first budget speech by saying it was a budget that pays for the past and plans for the future. This was an open speech compared to recent budgets and, as promised, there was very little “devil in the detail” demonstrated by the fact that there were far fewer Budget Notes than in previous budgets. However, given the limited time the coalition have had to prepare this budget it is probably understandable. The Chancellor reiterated his plan to reduce the deficit by a combination of cutting public spending and increasing taxation in an 80/20 split - this budget has a 77/23 spilt. Taxes were indeed increased but there were also targeted tax reductions to help business in particular.
The highlights for the emergency budget were well trailed and probably few were surprised that the “elephant in the room” VAT rises to 20% next year, that CT headline rates will decrease and basic rate taxpayers will benefit from higher personal allowances.
There will be a Bank levy and CGT increases from 23 June for higher rate taxpayers (although 28% wasn’t anticipated by all commentators). However, there was good news for business owners with the increase in the lifetime limit for entrepreneurs’ relief to £5 million.
The Chancellor said that a rate above 28% for CGT would lead to diminishing returns and also that much of the tax from the CGT rise will come from extra income tax.
These hints suggest that the new Government accepts that tax planning is part of life, although it intends to examine whether a General Anti-Avoidance Rule (GAAR) should ‘form one element of strengthened defences’.
The GAAR review will be part of a wider consultation on the tax policy making process. In the discussion document on improving tax policy the Exchequer Secretary says that a competitive tax system is at the heart of the Government’s approach and that they want a more considered approach.
So overall it was a budget which has generally been well received in business circles and we certainly did not have any of the stealth taxes or complex restrictions of tax reliefs which had been a feature of recent budgets.
For full details of the Emergency Budget please click on the link below:
