Written by: Moore Stephens
0 Comments
Chancellor George Osborne delivered what he described as a "tough but fair" Budget on 22 June. Overall it was seen by many as not being as ‘draconian’ as feared, says Mike Scott, Chairman of Moore Stephens South, a leading local accountancy firm.
Setting out the Government's target of bringing the current structural deficit into balance by 2016, the Chancellor said that it was on course to meet this goal a year early, with increases in both VAT and capital gains tax, a freeze on public sector pay for most workers and a major reform of welfare benefits raising an additional £40bn.
The widely expected rise in VAT from 17.5% to 20% will take effect from 4 January 2011. Capital gains tax will also rise from 18% to 28% for higher rate taxpayers, from 23 June 2010.
Declaring Britain to be 'open for business', the Chancellor outlined plans to reform the corporation tax regime with lower rates, simpler rules and greater certainty to enable companies to invest, attract foreign investment and boost growth.
The standard rate of Corporation Tax will be reduced from 28% to 27% on 1 April 2011, followed by reductions of 1% a year thereafter until it reaches 24% in 2014. The rate for small companies will also be reduced from 21% to 20% from April 2011. This is partly being paid for by a reduction in capital allowances that will take effect in April 2012.
Meanwhile, the threshold for employer national insurance contributions will be increased by £21 a week above indexation. In a bid to protect lower earners, the basic personal income tax allowance will be raised from £6,475 to £7,475 from April 2011.
Other good news was the re-linking of pensions to earnings and the surprise increase in capital gains tax entrepreneurs' relief threshold from £2 million to £5 million.
A detailed summary of the Budget is available at www.moorestephens.co.uk To discuss how it affects your business, contact Moore Stephens South on 01243 531600.
