UK Tax News from TaxPenny

The last budget to be given by labour for a while? Possibly, but this budget could be seen as much a fiscal response as an election response.

Below are the major points taken from todays announcements:

Economy

• Alistair Darling outlined that the countrys economy has shrunk by around 6% over the course of the now over recession.
• The recession is over in terms of a predicted growth of 1-1.25% this year and 3-3.5% through next year.
• Borrowing will be on a sliding scale over the next 4 years in labours plan - £167bn this year, £163bn in 2011, £131bn 2012, £110bn 2013 and £74bn through 2014. This is a lower than forecast sum.
• This should go toward reducing the deficit from 11.8% of GDP at the moment to 5.2% in four years.

Taxes

• Bank bonuses raised £2bn in 2009/10 - double what was forecast.
• A co-ordinated, worldwide effort to impose taxes on banks partaking in risky business models is required.
• Stamp duty free allowance for first time buyers to be doubled to £250,000 from midnight tonight.
• Offsetting the increase in free stamp duty will be a 5% stamp duty on properties worth more than £1m.
• IHT threshold frozen for the next four years.
• HMRC to get more powers with tax information agreements on Dominica, Grenada and Beliza.
• Business rates cut for one year from October - 345,000 business will benefit from this.
• No changes to be made to income tax, NI or VAT other than those already announced from the Pre-Budget Report. Our tax calculator is already updated - see the 2010/2011 Tax Calculator.
• Annual ISA limit to rise from £7,200 to £10,200 next month - limits will rise annually from now.
• Parents of one- and two-year-old children to get an increase of £4 a week in child tax credit from 2012

Jobs

• Extension of tax credits for older workers - To make it easier for those over 60 to receive working tax credit, the Government will reduce the minimum hours they need to work to be eligible.
• No one under 24 will need to be unemployed for longer than six months before being offered work or training - this will last over the next two years.
• 15,000 civil servants relocated, including 1,000 Ministry of Justice posts moved out of London.

Alcohol & Cigarettes

• Cider - duty increased by 10%.
• Beers, wines and spirits - duty increase by 2% above inflation.
• Tobacco - duty rises by 1% above inflation immediately, then 2% from 2010/2011.

Fuel

• Stepped increase in fuel duty (instead of 3p increase in one hit) - it will rise by a penny in April, then by a further penny in October - remainder of increase (1p)  in January 2011.

Business

• RBS and Lloyds pushed to provide new business loans - £94bn will be released, hoping nearly half will get to SMEs.
• A new credit adjudicator will fast-track complaints from smaller firms who say they have been unfairly denied credit.
• Faster licensing process for new banks to boost competition.
• Goverment will try to send 15% more public contracts toward SMEs.
• Annual Investment Allowance doubled to £100,000.

Measures taken to save public money

• From October 2011? - the most expensive properties will be removed from housing benefit calculation in each area and added to anti-fraud measures this hopes to save £250m/year.
• More to be published on a further £11bn of new savings.

What are your thoughts?