TaxPersonal TaxBrown avoids damp Budget

Brown avoids damp Budget

The chancellor's Budget speech this year could have been a bit of a damp squid. He had already announced so many forthcoming changes that we wondered if this would merely be a formality reiterating past announcements. Gordon Brown still had a few tricks up his sleeve, however.

As well as further clarification on employee share schemes, charitable giving and stakeholder pensions he announced various other measures both in relation to public spending and taxation. While wishing to be prudent, he allocated resources to the NHS and low income families. Tax changes tended to be either to encourage enterprise and entrepreneurs or specific anti-avoidance measures.Keen to keep inflation carefully under control, and anxious to slow down the property boom in the south, he increased the rates of stamp duty by another 0.5% for properties costing over £250,000. Whether this is sufficient to make any noticeable difference to the property market remains to be seen.

E-commerce remains a buzzword for the chancellor. He had previously announced ‘discounts’ for filing and payment of tax via the internet. But now he has confirmed a further £50 discount could be available for small employers. Moreover he introduced enhanced capital allowances (100%) for expenditure on computers/information technology for SMEs. Such businesses will effectively obtain a full deduction for tax purposes for such expenditure in the period in which it is incurred.

Corporation tax on chargeable gains also attracted attention. No longer will groups be forced to transfer assets around the group prior to sale to secure the best tax treatment: instead an election will suffice. In addition rollover relief may be extended to include gains arising on substantial shareholdings in trading companies. Consultation is expected in the early summer.Nevertheless, Brown obviously felt that significant amounts of this tax were being lost to the Exchequer and he introduced a number of anti-avoidance measures, particularly in relation to stamp duty and capital gains tax, to block loopholes which were being exploited by enterprising accountants and their clients.

Quite a subdued budget, as expected with all the previous announcements, but many small changes, some larger ones and a few future changes heralded.

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