Pre-Budget Report 2009 - news just in
The Chancellor has made the following guarantee to everyone in work - that they will be better off in employment than on benefits.
We will investigate the detail and aim to blog on this topic later.
Pre-Budget Report 2009 - "to promote growth"
The Chancellor has just commenced presenting his Pre Budget Report. He tells us it is focused on ensuring recovery and promoting long term growth. He aims to support specific sectors and helping young people into work.
Further analysis will follow.
HMRC admit the extent of legitimate tax leakage
Having seen the Chancellor announce the introduction of new 50% (and, in some cases, 60%) tax rates, the Treasury have admitted that legitimate tax avoidance is expected to reduce their impact by nearly 70%.
This would reduce the additional tax collected by something like £2.5billion, annually.
The reduction in tax relief for pension contributions made by those earning £150,000 or more will cut this tax leakage from 2011 on but it seems likely that people taking steps to lessen the impact of the new rates will keep the extra money available to the Treasury to a minimum.
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David Mansell is a Corporate Tax Partner at Mercer & Hole.
Income shifting - a respite
There was general rejoicing when the Chancellor announced that the Income Shifting provisions would not be introduced from 6 April. However, at least for the moment this is a postponement and not a cancellation. The Red Book shows that the Government intends to raise significant amounts of revenue from income shifting legislation from 2009 onwards. This is unlikely to go away so we must make the best of the opportunity that we have been given and sort things out over the next year.
Some entrepreneurs benefit, but not their employees!
As you are only too well aware by now, the Chancellor announced a major reform of the capital gains tax (CGT) regime by setting a single flat rate of 18% from April 2008. Following a major outcry, the new entrepreneurs’ relief has been announced; this relief will reduce gains liable to CGT by 4/9ths, resulting in an effective rate of 10% on gains of up to £1m on disposals of a business by an individual.
But while business owners may be relieved by the introduction of a 10% rate of CGT on the first £1m of gain, their employees are likely to be far less happy as holdings of less than 5% will not qualify for relief.
The Government have encouraged companies to reward and motivate employees with shares but now exclude such employees from the new entrepreneurs’ relief.
There must be some logic – my problem is I just can’t see it!
Pre Budget Report 2007 - Initial response
Having listened to the Chancellor speak for just over 30 minutes I was unpleasantly unsurprised to discover the ream of paper supporting his speech. The devil is certainly in the detail and it is becoming increasingly apparent why – to use an analogy – in Peter Pan the same person who plays Mr Darling also plays Captain Hook.
The tax implications and complications are potentially horrendous. Watch this space for further details...
The tax implications and complications are potentially horrendous. Watch this space for further details...
