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New Government, new tax rumours……

13 May 2010 No Comment

Since the politicking has ceased (momentarily) and we now know the shape of our new Government, we also know a bit more about how the coalition views the tax regime and therefore the possible changes to tax policy that may be included in the emergency Budget within 50 days.

These might include:

  • A substantial increase in the rate of capital gains tax on non-business assets to marginal rates of tax which could therefore be 40% or 50% rather than 18%. Apparently, there will be “generous exceptions for entrepreneurial activities”.
  • A large increase in the income tax personal allowance in April 2011 as the Government aim to raise the threshold to ┬ú10,000 during this parliament. The first step on this transition will be to increase personal allowances by ┬ú1000. This will cost around ┬ú5bn and be paid for by not implementing the Conservative plan to raise the employee threshold for National Insurance. The remainder will come from raising capital gains tax for individuals as mentioned above.
  • Adoption of the Conservative proposal to recognise marriage in the tax system, although the Liberal Democrats will abstain from (rather than support) this measure.
  • Scrapping at least part of Labour’s proposed national insurance increase in April 2011.
  • Shelving the Conservatives’ proposal to increase the inheritance tax threshold to ┬ú1m, and the Liberal Democrats’ ‘mansion tax’ proposal.
  • An increase to 20% of the standard rate of VAT from “next year”

There are rumours that the increase in CGT rates could also include a return to either the retirement relief or taper relief regimes.

If you would like to discuss any issues prior to the 50 day budget, please give either Bernice Constantine (01752 203651), Nicola Cowie (01752 203600) or myself a ring.

We’ll update you as soon as we hear anything more, even if it’s just vicious rumours!

Jon Stacey

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