Following the May 2010 election, the new coalition Government have presented their first budget.
As you would expect from a new Government the budget either introduces or promises a different approach to that already in place and there is no exception with regard to taxation and pensions.
The main proposals of interest are:-
- A new 28% CGT rate for disposals made by higher rate and additional rate taxpayers after midnight 22 June.
- The lifting of the entrepreneurs’ relief limit to £5m for disposals from midnight 22 June.
- The maintenance of the CGT annual exemption at £10,100.
- The raising of the personal allowance by £1,000 from 6 April 2011 for basic rate taxpayers.
- The promise of consultation on the limitation of higher rate tax relief on pensions with the real possibility of a simplified solution founded on the reduction of the annual allowance to £30,000 - £45,000.
- The raising of the VAT rate to 20% from 4 January 2011.
- The reduction of the main rate of corporation tax to 27% from 1 April 2011.
- Further 1% pa cuts in the main rate of corporation tax proposed until a rate of 24% is reached in 2014/15.
- The reduction of the small companies’ rate of corporation tax to 20% from 1 April 2011.
These changes supplement the changes we already know about and are living with ie:
- The 50% additional rate of income tax.
- The reduction and possible loss of personal allowance once income exceeds £100,000.
- The freezing of the higher rate threshold.
- The freezing of the IHT nil rate band at £325,000 until the end of 2014/15.
