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UK Budget Report - Will it fix the UK economy?
The 2010 UK Budget Report has been announced. What the country needed was a Budget to mend the economy and the focus on cutting public spending comes at the right time. However, the measures do not go far enough and in fact - estimates show that the public sector deficit may worsen in 2010 as a result of the changes. Taxand UK analyse the full UK Budget and discuss the implications for businesses in their latest update.
"The opportunity to create new tax law in the Finance Bill this year will of course be subject to who wins the election. If the
election results in change then the current Government's ability to pass all the proposed changes to tax legislation will inevitably be severely limited. If the Government remains in power then we can expect its proposed changes announced in the Budget to ultimately become law. Tax policy would become a subject for hotly contested debate in the event of a hung Parliament. Any uncertainty could shake companies' faith in the UK as a suitable place for their headquarters.
The Chancellor has resisted the temptation to apply further tax hikes to higher rate tax payers - despite such measures being popular with potential voters. Perhaps the real threat of a brain drain has been recognised. However, we still have a number of legacy tax provisions hitting these taxpayers in 2010." David Pert, Taxand UK
The major changes are as follows:
Anti-avoidance measures centred on promoters of tax avoidance schemes and those who introduce their clients to a notifiable scheme.
Commitment to and concessions for small and medium sized enterprises.
Extension of time-to-pay and business payment support services for businesses having difficulty paying taxation.
An increase in stamp duty to 5% on the purchase of homes exceeding ?1m in value.
Freezing of tax exemption thresholds amounting to 'fiscal drag' where these thresholds are not raised in line with UK support was provided for a tax on the financial services industry subject to international agreement.
Regulations are in progress for increased disclosure of financial services remuneration.
"The changes for smaller businesses are unimpressive and they will do little to increase the attractiveness of the UK as a global business centre." Rebecca Hoover, Taxand US
"The budget seems to concentrate on trying to get a bigger share of a shrinking pie rather than creating an environment where the pie will get bigger." Keith O'Donnell, Taxand Luxembourg
"There are policing provisions that acknowledge the Government is taxing their citizens too onerously. It is nice to see the SME's getting a break given that will be all that will be left in the UK if the Government keeps following its current strategy." Martin Phelan, Taxand Ireland
"The clampdown on anti-avoidance measures and the increased powers of the tax authorities have been witnessed in Germany in recent years. The measures have had varied degrees of success." Arianne Jerey-Hener, Taxand Germany.
"Not a very exciting Budget and we are still waiting to hear on the much publicised 'patent box' regime. What is taking so long?" Marc Sanders, Taxand Netherlands.
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Download the full report from Taxand UK:
AM TaxandUK 2010 Budget.pdf
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