Pre-Budget statement: Boost for inner cities
Gordon Brown today unveiled ambitious tax cuts and investment plans in his pre-Budget report on Wednesday to regenerate deprived towns and cities and stimulate enterprise and employment.
The chancellor announced a £1bn package of measures to span five years in response to Lord Rogers’ Urban Task Force report ‘Towards an Urban Renaissance’. It is hoped the package will help harness the potential of derelict and under-used buildings and sites.
‘The radical reform of tax incentives will start with the introduction of stamp duty exemption for all properties in deprived areas,’ said Brown.
Alastair Kendrick, Ernst & Young tax director, questioned whether or not the tax relief for inner cities ‘was too little, too late’. ‘Lots of cities have already adapted to out of town shopping malls and such like,’ said Kendrick.
Accelerated payable tax credits for cleaning up contaminated land were also announced giving property developers tax relief for their clean-up costs, instead of having to wait until the land is sold.
Kendrick also question the means of regenerating inner cities.’Is this the easiest way of regenerating or could money have come in in other ways, i.e. directly through local authorities.
Government intends this to make more projects to regenerate derelict sites more viable for the benefit of local residents and businesses and help address the legacy of the past.
Other measures included 100% capital allowances for creating ‘flat over shops’ for letting and VAT reform to encourage additional conversion of properties for residential use. This will involve cutting the VAT rate to 5% for residential conversions.
Kendrick said: ‘If the government is trying to cut red tape, are these measures not introducing even more confusion with variability of VAT rules and stamp duty exemption.’