Poor darling. It is hard not to feel for a man who has to get past a picket of unhappy public servants in order to deliver his third – and very possibly his final – Budget in front of a nation that is, for the third year on the trot, unhappy, pessimistic, and sceptical about the economy. And this year, particularly, the scepticism was likely to border on cynicism when it came to consideration of the motives behind his announcements.
The Chancellor was at pains to insist in the run-up to the day that the Budget would not contain pre-election giveaways, that it would be a Budget focused, rather, on harsh realities and the avoidance of a
Bookmakers were offering odds on the colour of the tie that Mr Darling would be wearing when delivering his speech but as far as I know there were no bets being taken on the nature or colour of his hosiery. Considering some of the tax measures announced – and re-announced – today, one might be forgiven for expecting to see a flash of Lincoln green on the Chancellor's ankle. Some of the measures carry a distinct whiff of Sherwood Forest, and a few of these are examined below.
Stamp duty land tax
Starting on 25 March 2010, there will be a two-year
Mr Darling was at pains to point out that this measure would be balanced, in true Robin Hood style, by the levying of a higher rate of SDLT on transactions in residential property costing more than £1,000,000. Such transactions will incur a charge of 5 per cent, where currently they fall into the 4 per cent top rate category for homes costing over £500,000. As this rate increase does not come into effect for completions made before 6 April 2011, legal firms' conveyancing departments may find themselves quite busy in around a year's time.
Having announced in December's Pre-Budget Report that the IHT nil rate band would be frozen at £325,000 for 2010–11, the Chancellor went further today: that figure will remain unchanged up to and including 2014–15. This extension of the freeze, we were told,
Income tax rates
Income tax rates for 2010–11 are to be as we have been expecting since the Pre-Budget report: the basic rate will remain at 20 per cent, with no change to the basic rate limit of £37,400, and a new 50 per cent rate will apply for taxable income over £150,000. In addition, 2010–11 will see the start of the tapering off of the personal allowance for adjusted net income in excess of £100,000. While those with incomes over £100,000 may not be too happy after 6 April, the other 98 per cent of the UK's earners should be whistling a relatively happy tune as they make their way to the polling station.
Savings: pensions and ISAs
The restriction on tax relief for pensions savings (basic rate relief only for those with income over £180,000, with a sliding scale for those with incomes over £150,000) was announced a year ago and will come into effect from April 2011. At the other end of the savings scale, the ISA limits will increase next month (to £10,200) and then will increase annually in line with inflation.
Small and medium-sized enterprises
Stepping just slightly beyond Sherwood Forest into the world of modern business, two important measures were announced that should be of real benefit to the smaller enterprise.
First, the Annual Investment Allowance (AIA) for capital allowances is being doubled, from April 2010, to £100,000. This £50,000 annual increase is likely to make a real difference to the smaller business considering investing in plant and machinery, effectively removing as it does the distinction, in terms of tax treatment, between capital and revenue expenditure on a doubled budget.
Second, the lifetime limit for capital gains tax entrepreneurs' relief will also be doubled from April 2010, to £2m. Again, this is intended to encourage investment in small enterprise and it is a measure that seems welcome.
Darling's last stand?
Mr Darling's Budget was his third and may have been his last. The tax measures in the 71 Budget Notes are, in general, unsurprising. There are the usual announcements about tightening up anti-avoidance rules and encouraging
Alison Aspin is a senior technical editor with CCH.
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