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Date: 5 July 2010
THE BUDGET AND OTHER STUFF
Firstly, before we lose sight of it in all the excitement, with effect from 20 May 2010 we no longer needed provide a HIPS packs when selling residential property on the open market. There are already reports that the housing market has started to improve partially because of the relaxation of the requirement.
However we need to remember that we still need an Energy Performance Certificate to be provided in a land transaction to comply with European legislation.
There were no changes in the budget relating to stamp duty or stamp duty land tax over those announced in the previous March budget, the rates remain unchanged for share purchases and land transactions.
However it has been reaffirmed that as from April 2011 a 5% rate will start for residential purchasers of properties over one million pounds as was set out in the previous budget.
Now on to the key points from the Budget where things are to change:-
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VAT – from January 2011 VAT will increase to 20%. The range of goods and services on which VAT is currently charged will remain unaffected.
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CAPITAL GAINS TAX- rates will increase from 18% to 28% for higher rate tax payers. The 28% rate of capital gains tax will also apply to disposal made by trustees. Also there is hidden in the small print the proposal that those who pay the £30,000.00 remittance basis charge will also pay capital gains tax of 28% regardless of their income levels.
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CORPORATION TAX -There will be a phased reduction in the main rate of from 28% to 24% by 1% over the next four years. Small companies are also inline to benefit from a reduction in their rate to 20% with effect from April 2011.
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NATIONAL INSURANCE CONTRIBUTIONS will increase, however the revenue will be offset by an increase in the thresholds at which contributions start to be made. Employers will be disappointed that the increase in national insurance contribution of 1% for employees and employers will be going ahead as from 6 April 2011. That said the level at which employers start to pay national insurance contribution will increase by £21.00 per week above indexation.
The cost of the combined measures is likely therefore to be disproportionally borne by businesses employing relatively higher paid employees.
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A BANK LEVY- based on balance sheet to be introduce from January 2011, the intention being to encourage banks to move to less risky funding profiles and there are further measures in hand to address the high profile issues of bank bonuses.
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INSURANCE PREMIUM TAX is increased to 6% and the higher rate to 20% as from 4 January 2011.
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INCOME TAX- Personal allowance for those aged under 65 will increase from £6,475.00 to £7,475.00 with effect from the 6 April 2011. The basic rate limit for income tax will be reduced to ensure that higher rate tax payers do not benefit from this increase. The actual figures will not be known until the RPI figure for September is available.
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Our private client team is here to help you and work with your accountants in personal tax planning, and we have strong and long standing contacts within the accountancy profession should they be required.
Clive Vernon
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