UPDATE – BUDGET REVIEW

Following Alistair Darling’s recent Budget, the following items stand out as being of some interest.

Most commentators have suggested that this was mainly a politically motivated Budget rather a financially motivated Budget and that with the forthcoming General Election whichever Party forms the next Government a second Budget is likely and the finer details of the tax rates and legislation affecting the fiscal year 2010/11 might be further altered.

Update for Businesses

The headline rates for Corporation Tax for small and large companies will stay consist with current rates, i.e. 21% and 28%, respectively.

There are currently tax allowances available for businesses investing in plant and machinery of up to £50,000 per annum. This limit has been increased to £100,000 per annum.

Business Rates

The Government has announced that it will fund a business rates holiday for those businesses occupying properties with a rateable value up to £6,000. This holiday will be for one year from October 2010. Additionally, small businesses benefiting from business rates relief on rateable values up to £12,000 will also receive further reductions.

Personal Tax

All headline rates and allowances have been held the same; however, the implication of this is that as inflation rates are scheduled to be over 3% per annum, this will effectively mean tax increases to all individuals.

ISAs

From 6 April 2010, the ISA annual subscription limit is being increased for all savers to £10,200 (previously the limit was £7,200).

From 6 April 2011, and over the course of the next Parliament, the ISA limit will increase annually inline with the Retail Price Index.

Capital Gains Tax

Capital Gains Tax rates and exemptions have been held at the same level. The most notable adjustment to the Capital Gains Tax regime was the increase in Entrepreneur’s Relief from a £1m lifetime limit to a £2m lifetime limit whereby the effected rate of Capital Gains Tax will be reduced from 18% to 10%.

Inheritance Tax

The Inheritance Tax nil rate band has been held at £325,000.

As well as the normal increases in duties on cigarettes, spirits, beers, ciders and fuel, there was a key announcement in relation to Stamp Duty Land Tax for first time buyers whereby the threshold for purchase before which Stamp Duty will be payable has been increased to £250,000 and the top rate of Stamp Duty has been increased to 5% on residential properties over £1m.

VAT

No change announced in the rate of VAT.