Press Release

12 March 2008 - 2008 Budget Review

Chancellor Darling’s Budget 2008

This was the 1st Budget given by the Chancellor, following 11 years of Gordon Brown in the role.

As indicated last year Gordon Brown’s 2007 Budget was effectively for two years and consequently a number of the tax changes were already well known and documented.

For individuals these included from 6 April 2008 the 2p reduction in basic rate Income Tax coupled with the removal of the 10% lower rate bracket, and the extension of the band on which employee’s National Insurance at the full 11% rate is payable. 

For businesses this included the cut in headline Corporation Tax from 30% to 28% from 1 April 2008. However the vast majority of companies in the UK pay Corporation Tax at the lower rate which is being incrementally raised from 19% to 22% and the changes announced to capital allowances will not benefit most of these companies.

Last autumn three significant tax changes were announced. The immediate extension of the Inheritance Tax thresholds; from 6 April 2008, the removal of the benefits of previous indexation and taper relief for individuals subject to Capital Gains Tax; and from 6 April 2008 the revised treatment of the ‘Non-Doms’ tax breaks.  As has already been reported entrepreneurs will now be taxed at 10% rather than 18% on the first £1m of their capital gains.  The position regarding ‘Non-Doms’ has been tweaked since the new tax regime was originally announced but is broadly the same and there is no postponement of the start date of 6 April 2008.

One notable announcement concerned the postponement of the proposed income shifting legislation which is, in the short term, good news for all family and owner managed business.  However the future tax position remains uncertain.

Yet again further ‘green tax’ issues were announced, but not enough in many peoples opinion, along with changes in excise duties principally affecting cigarettes, alcoholic drinks, cars and fuel.

The big economic picture is whether the Chancellor is justly confident or over complacent of the UK economy’s ability to ride the worldwide economic downturn.

Overall a boring Budget, boringly presented and one which will do little to give confidence to UK businesses or tax payers.

We shall continue to monitor the progress of the Budget through Parliament and will comment on any major changes or developments as they arise.

As always we will seek to identify any interesting opportunities for companies, as well as individuals and their families, and would welcome the opportunity to pursue these further with our clients, and those interested in maximising the benefits of the Budget proposals.

We shall be pleased to discuss any aspect of the Chancellor’s proposals with you in greater detail, or for that matter, any other aspect relating to your financial affairs generally.

As the Budget proposals are subject to amendment during the passing of the Finance Bill we would not recommend any action be taken, based on these proposals, without taking prior advice.

KINGSWOOD

March 2008

For further information contact telephone (020 7841 0000) or email either

Jonathan Massing (jonathan.massing@kingswood.org.uk) or
Howard Moss (howard.moss@kingswood.org.uk)