The Budget 2010 Key Points

5 07 2010

Economy

  • Growth is forecast to be 1.2% this year, taking into account the budget measures. It is forecast to be 2.3% next year, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and 2015.
  • Debt will be falling, and structural current deficit should be balanced by 2014.
  • Unemployment rate forecast to peak at 8.1% this year, and then fall for each of the next four years to reach 6.1% in 2015
  • 77% of total consolidation to be achieved through spending reductions, and 23% through tax increases.
  • Public sector net borrowing will be £149bn this year, £116bn next year, £89bn in 2012-13, £37bn in 2014-15, falling to £20bn in 2015-16.
  • Additional current expenditure reductions of £30bn a year by 2014-15.

Public Sector

  • People earning less than £21,000 will each receive a flat pay rise worth £250 in each of the two years.
  • Operational allowance for troops in Afghanistan doubled to £4,800.
  • Will Hutton will draw up plane for fairer pay across the public sector, without increasing the overall pay bill, so that those at the top of the organisation are paid no more than 20 times the salaries of those at the bottom.
  • An independent commission chaired by John Hutton will review public sector pensions. There will also be consultation on scrapping default retirement age.
  • Rise in the state pension age to 66 will be accelerated.
  • Government will seek private capital injection into the Royal Mail Group

Welfare

  • Child benefit to be frozen for the next three years
  • Caps on housing benefits to be introduced – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger. Together with other measures, this will reduce the costs of housing benefit by £1.8bn a year by the end of parliament.
  • Sure start maternity grant will go to the first child only.
  • Eligibility for child tax credits to be reduced for families with a household income of more than £40,000 from April 2011.
  • The baby element of the child tax credit will be abolished from April next year.
  • Child element of the child tax credit to increase by £150 above indexation next year.

Taxes

  • Corporation Tax, currently 28%, to fall by 1p in the pound a year for four consecutive years until it reaches 24%.
  • New firms outside south-east/east to be let off employer nation insurance contributions, up to £5,000, for each of the first 10 employees recruited.
  • Government to work with local authorities to freeze council tax for one year from April next year.
  • Capital Gains Tax, currently 18%, to increase for higher earners to 28% from midnight. Low and middle-income savers will continue to pay 18%.
  • Higher rate income tax threshold frozen until 2013.
  • The standard rate of insurance premium tax to rise from 5% to 6% and the higher rate to increase from 17.5% to 20%.
  • 50p-a-month levy on phone lines to pay for the rollout of superfast broadband scrapped.
  • Planned tax relief for video games industry to be scrapped.

Banking and Savings

  • Bank levy to be introduced in January next year, to apply to the balance sheets of UK banks and building societies, and to the UK operations of banks from abroad. Expected to raise over £2bn of annual revenues.

Drinks, cigarettes and fuel

  • No increase in duties.
  • Reversal of government decision to increase duties on cider by 10% above inflation confirmed.

Pensions

  • From April next year the basic state pension will be re-linked with earnings.
  • Basic state pension will increase every year by highest of earnings, inflation or 2.5%.

Businesses

  • Regional Growth Fund to provide finance for regional capital projects over the next two years.
  • The 10% Capital Gains Tax rate for entrepreneurs, which currently applies to the first £2m of qualifying gains made over a lifetime, will be extended to the first £5m of lifetime gains.
  • Capital allowances for the majority of plant and machinery assets to fall from 20% to 18%, while the allowance for longer-lived assets will fall from 10% to 8% from April 2012.

Contact Us, or Get a free Quote, to see how we can help you deal with these changes. Tax Accountant.

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The Emergency Budget’s Main Bulletins – What Will Effect You

22 06 2010

‘I will not hide hard choices from British people’ – George Osbourne

VAT

On the 4th January 2011, VAT will rise to 20%. This will earn £13bn a year by the end of parliament.

Capital Gains Tax

The higher rate of Capital Gains Tax will be increased to 28% from Midnight tonight. The lower rate will remain the same, as will the Capital Gains Tax allowance (£10,100)

Entrepreneurial Relief

Instead of £2m of lifetime gains, the first £5m of lifetime gains will qualify for Entrepreneurial relief.

Income Tax

There is no increase in the rate in which Income is going to be taxed; but the personal allowance will raise to £7,475 a year from April 2011. This is one step towards gradually increasing the allowance to £10,000.

Public Sector Pay Freeze

There will be a 2 year pay freeze for Public Sector employees

Tax Credits

Tax credits for families earning over £40k a year will be reduced.

Child Benefit

Child benefit will be frozen for 3 years.

Housing Benefits

Maximum limits on housing benefits will be introduced.

State Pension Age

The plans to raise the State Pension age to 66 will be accelerated.

Corporation Tax

Corporation Tax will be reduced by 1% each year for the next four years, bringing it down to 24% by the end of parliament.

Bank Tax

Starting in January 2011, there will be a bank tax. This tax, by the end of parliament, is expected to raise £2bn a year.

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What Will The Coaltion Government’s First Budget Bring?

26 05 2010

Last week, our new Chancellor, George Osbourne, announced that his first budget date will be on the 22nd June. Since then, there has been much speculation as to what this has in store for us. Below are just a few things I’ve come across: Read the rest of this entry »





HMRC announces ‘light touch’ approach to VAT rate change

25 11 2009


HMRC have said that it will be applying a ‘light touch’ approach if businesses make mistakes on their returns following the upcoming change in the standard rate of VAT.

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VAT Do’s and Dont’s

13 11 2009

 

If you need to check that you are being given a valid VAT number, you can call HMRC’s national advice service on 0845 010 9000 from 8am to 8pm Monday to Friday.

DO obtain and keep VAT invoices – these are your authority to claim back VAT on supplies made to you

DO charge VAT on supplies sold to staff

DO charge VAT on any equipment or vehicles (except motor cars) that you sell or part-exchange

DO account for VAT on fuel used for private use, using the appropriate scale charge

DON’T claim the VAT paid on purchasing a motor car – apart from a few very special cases, this is not recoverable

DON’T claim VAT paid on goods or services used for privates purposes. Where there is an element of private use, for example the telephone, an appropriate percentage should be claimed. Special arrangements apply to the private use of petrol

DON’T claim the VAT paid on entertaining

DON’T forget to account for VAT on inter-company charges

DON’T charge VAT on the transfer of a business as a going concern (make sure contracts include appropriate VAT provisions)

For more help with VAT, why not check out the Best Accountants in Sussex?Tax Accountant  Make sure you’re aware of the new National Minimum Wage Rates for 2011 – they come into effect in October 2011.





VAT rate stays at 15% for drinkers

4 11 2009

We all know that the VAT rate goes back up to 17.5% on 31st December at midnight, but what some people don’t know is that pubs, restaurants and clubs have been given permission to keep the VAT rate at 15% until 6am New Years Day.

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Correcting VAT Errors

2 11 2009

Where you find an error in your VAT records, which has already been included in the figures reported on a VAT return, don’t panic! You can correct that error on your next VAT return, as long as the net error amounts to VAT due Read the rest of this entry »