BUDGET 2010
SUMMARY (Part 3)
TAX
- The increase in the main rate of National Insurance by 1% had been announced previously but will not come in until April 2011.  Those earning less than £20k per annum will not be affected.
- Inheritance Tax Thresholds to be frozen for 4 years.  This is in effect a tax increase as those people’s estates that increase will then see their tax burden increase more than it should do.  This I believe should have been increased and amended to allow those people to have saved and invested well to be able to pass on the rewards to their loved ones….unfortunately not for the short term now.
- Annual Investment Allowance – to increase from £50,000 per annum to £100,000.  A welcome increase for those businesses making capital expenditure of such amounts but remember that it does not apply to cars and also if you claim the full £100,000 in year 1 and then sell it 3 years later for £60,000 you will effectively have to pay tax on that £60,000!  Careful planning is required to ensure you do not fall in to such a trap.
- Entrepreneurs Relief – A tax at 10% on business gains made instead of the current rate of 18% - this was initially for the first £1 million of gains however this has been raised now to £2 million.  Again great when business owners/entrepreneurs sell up but in my experience a small percentage sell at the right time (if at all) and most will continue with their business up until retirement so no great impact on the business economy as a whole.
- Main rate of Capital Gains Tax to remain the same.
Finally he went on to discuss the drive to increase the pressure on those deemed to be evading tax.  No detailed measures were announced (other than country agreements with Greneda, Dominica & Belize) though HMRC are clearly following a route where they are receiving information now far more than ever from “other sources” (including other businesses, countries, banks, financial sectors) to trap those not paying their fair share in tax.  It is also possibly that increases to tax enquiries/investigations may be part of those measures unannounced.  Any one whom avoids tax is at risk and as such it is only fair that they are targeted.
In summary some surprises, some not so surprising announcements, some ideas stolen from the Conservatives have some little ideas of their own.  A budget in effect to get Labour back in to Government…so they see it at least.  The devil as mentioned is in the detail (The Red Book!) and we will await the fallout over the next few days!!

Disclaimer
The above synopsis and comments made are on the first review of the Budget 2010 made by the Chancellor…...before acting on any of the above it is important that professional advice is sort especially with regard to the timing of actions and the detail behind any such actions.  Eagle Accountancy, it’s principal nor any of its staff will take no responsibility for any actions taken on the above synopsis or comments.