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Personal Income Tax
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Budget Summary Introduction
Alistair Darling presented his second Budget speech in his usual calm, quiet tones, occasionally having to raise his voice over the opposition MPs' cries of astonishment at the awful economic statistics that he was announcing. His predictions from last November, depressing though they were, turned out to be far too optimistic. He tried to reassure us by saying that things will get better next year, but how reliable are his forecasts now? What is certain is that the Government is very short of money, and will have to start raising cash from somewhere soon.|
Mr Darling's delivery tended to disguise the significance of some of the things he said: for example, he swept away New Labour's repeated promise not to raise the top rate of tax within the life of this Parliament. In 2010/11, income tax will be levied at 50% on those with incomes above £150,000, and new rules on personal allowances will create a 60% tax band for those earning just over £100,000. Mr Cameron hopes to win an election on the back of Labour's economic problems, but then it will be his turn to try to fill the hole in the public finances - it will be interesting to hear the Conservatives' proposals for doing this as the election approaches.
Meanwhile, HM Revenue & Customs have been given new powers to inspect taxpayers' records from 1 April 2009, and new severe penalties may be imposed on people who have paid the wrong amount of tax carelessly or deliberately. Some of the Budget announcements indicated a further crackdown on tax avoiders and tax evaders. The Government - whichever side is in - will be looking for money. We will continue to provide support and advice when they come knocking.
- Income tax rates to rise for high earners in 2010/11.
- Further increases to come in taxation of company cars.
- Tax relief for pension contributions to be restricted for high earners in 2010/11.
- Increase in ISA investment limits.
- Extension of Stamp Duty Land Tax holiday to December 2009.
- First year allowances for purchases of plant for one year.
- New crackdown on tax evaders.