The increase in the rate of VAT from 17.5% to 20% to take effect in the new year.
The increase in the personal allowance by £1,000 in the tax year 2011/12.
The immediate increase in the rate of capital gains tax for higher rate income tax payers from 18% to 28%.
The rise in entrepreneurs relief for capital gains tax from £2 million to £5 million.
The progressive cuts in the rates of corporation tax over the next four years, financed by cuts to capital allowances.
The abolition of the effective requirement to annuitise pensions at age 75 and the prospect of changes to higher rate tax relief on pension contributions.
ISA allowances to increase annually by inflation.
Although it was a tough budget there are a number of positive points.
Despite prior speculation of possible reductions, the £10,100 annual Capital Gains Tax allowance remains and will increase with inflation. This is useful for clients to crystalise investment gains without paying tax, particularly coupled with the increase in the ISA allowance annually in line with inflation.
The abolition of the requirement to purchase an annuity at age 75 is welcome news for clients yet to commence drawing pensions, as this offers greater flexibility and choice.
References to legislation and taxation are based on Cooper Johnston’s current understanding of law, HMRC practice and the Pre-Budget report June 2010. Legislation and taxation are liable to change, and the proposals in the Pre-Budget report may not become law. Cooper Johnston is not responsible for any advice based on the content of this article.