24 June 2010

UK Budget 2010 - Highlights

The UK Budget – Highlights

Corporation tax rates
Finance Bill 2010 will include legislation to reduce the
main rate of corporation tax from 28% to 27% from
1 April 2011. Further reductions to the main rate are
proposed to reduce the rate by 1% per year to 24% by
1 April 2014. Corporation tax on ‘ring-fenced’ profits
from UK oil extraction and oil rights will remain at 30%.
In addition, Finance Bill 2011 will introduce legislation
to reduce the small profits rate from 21% to 20% from
1 April 2011.

Comment: OK not too bad. But I think the UK Government
Should remember that it’s the private sector that ‘Brings home the Bacon”,
So do not tax them to much.

Tax credits and welfare reform
In accordance with the Government’s stated focus on
spending reductions outweighing tax increases, the
Chancellor announced a number of reductions to tax
credits and welfare benefits.
From April 2011, tax credit eligibility will be reduced for
families with household income above £40,000. The
Government will make further changes in 2012-2013
with the aim of focusing tax credits on lower income
families. In addition, child benefit will be frozen for three
years from April 2011.

Comment: Good move. Far too many families receive tax
Credits (old Family allowance) who do not really need it.
Give the money to poor families.

Personal taxes
Income tax allowance and basic rate limit
With effect from 6 April 2011, the personal allowance
for individuals aged under 65 years of age will increase
to £7,475 but the basic rate limit will be reduced so
that higher rate taxpayers will not benefi t. It is unclear
at this stage whether this represents a real tax increase
for individuals over £100,000 who will have had their
personal allowances withdrawn.

Comment: No real change here, but the UK is still a high tax
Nation (the new government claim otherwise).
Why have they not scrapped the 50% tax rate for high
Earners introduction by the previous Labour Government?

Capital gains tax (CGT)
From 23 June 2010, the rate of CGT will increase from
18% to 28% for higher rate tax payers. The rate of CGT
will remain at 18% where a taxpayer’s total income
(including gains) does not exceed the upper limit of the
income tax basic rate band. For trustees and personal
representatives of deceased persons, the normal rate
will be 28%. However, annual exemption limits will not
be reduced (currently £10,100).
To support investment in enterprise, the Government
announced it will extend the lifetime-gains limit for
entrepreneurs’ relief from £2m to £5m. This relief
provides for certain qualifying gains to be taxed at 10%.
This increase is effective from 23 June 2010.

Comment: Not good.

Indirect taxes
The standard rate of VAT will be increased from
17.5% to 20% from 4 January 2011. Anti-forestalling
legislation will have effect from 22 June 2010 to counter
arrangements that seek to apply the 17.5% rate to
goods and services to be delivered or performed after
4 January 2011.

Comment: Very bad idea. But the country is desperate
For income.

Overall it makes me think that the UK Government employs far too many people.
During the past 13 years the country has been drifting towards becoming a socialist state. I just hope the new government can steer the country back on the road to a free enterprise economy based on capitalism.

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