As expected, not a particularly daring budget, with some obvious “delays” in decisions until after the General Election.

At the higher end of tax, in addition to the previous increases announced there is no change to the Inheritance Tax nil rate band for four years. It is now essential that anyone with an estate anywhere near the current band seeks sensible advice to mitigate or plan for any tax – it is clear there is no more help coming from the Government.

Although the clampdown on tax avoidance is currently focussed offshore, and the specific agreement with Belize is political point scoring, this will undoubtedly move back to the UK. There has never been a better time to consider the remaining opportunities before loopholes are closed.

Key points of the Budget:

• Stamp duty – 0% for homes under £250k for first time buyers, but an increase to a new 5% rate for homes over £1 million from 6th April 2011.
• Tax allowances for those earning over £100,000 gradually removed
• No changes to VAT or income tax planned
• Inheritance tax threshold frozen for four years
• Increase in Entrepreneurs Relief to £2m
• ISA limits will increase with inflation in future years, £10200 per person from Tax Year 2010
• Clampdown on tax avoidance to raise £500m
• New tax agreements with Belize, Grenada and Dominica
• 3p fuel duty rise to be phased in between April and January 2011
• Duty on cider to rise by 10% above inflation from Sunday
• Wine, beer and spirit duty up 2% a year until 2013
• Tobacco duty up 1% this year and 2% a year in future years
• no change to CGT
• Pension Lifetime Allowance of £1.8 million and Annual Allowance of £255,000 will continue to apply at these levels for a further five tax years, i.e. up to and including the tax year 2015-16.
• NIC rates increases that had been announced in PBR 2008 and 2009 to go ahead (the doc attached covers all of these)

Full Budget Details

Clearly there is a need to increase the amount received by the Exchequer to ensue the huge deficit is repaid over the coming years, but precisely how best to achieve this is most likely to be left to the next Government.

The best of the “best guesses” for budget proposals are as follows:

• broader powers for HMRC, primarily to support them in examining tax avoidance
• preparation for an increase in Capital Gains Tax
• reduction in reliefs for Venture Capital Trusts and Enterprise Initiative Schemes, which are seen as “non-dangerous” changes for the majority of taxpayers
• some focus on residency and foreign banking regulations

We are not expecting any reversal of proposals for taper reductions to 20% on pension contributions.

Lansdown Place will release a summary of the budget as presented on 24th March

Nothing of any great surprise or substance, unless you have a wind turbine, are looking for an electric company vehicle or are classified as a “banker”:

TAX

• Personal allowances frozen at 2009/10 levels
• Inheritance tax nil rate threshold frozen at £325,000
• 1p increase in corporation tax for small companies to be deferred
• All national insurance rates to rise by a further 0.5% from April 2011
• Pensions higher rate tax relief further restricted for incomes over £130,000
• VAT to return to 17.5% from 15% from 1 January 2010.
• One-off 50% tax on banker’s bonuses of more than £25,000
• Stamp duty holiday on certain properties to end on 1 January 2010
• Bingo duty to be cut from 22% to 20%

PENSIONS AND BENEFITS

• Basic state pension will rise by 2.5% in April 2010
• Contributions to public sector pensions to be cut by £1bn a year

ECONOMIC FORECASTS

• Growth of 1%-1.5% expected in 2010 and 3.5% in 2011 and 2012

• Estimated public loss from bank bailouts reduced from £50bn to £10bn

• Total spending in 2010-11 to rise by £31bn

OTHER

• Electric cars to be exempt from company car tax for five years

• New 50p tax on landline phones to pay for superfast broadband