TaxPersonal TaxBudget 2000: NHS is real winner

Budget 2000: NHS is real winner

The NHS seems to be the Budget winner, with more money now and in the future as the government tries to bring UK health spending up to average European levels. The economy is doing well and the chancellor could easily afford some increased spending, whilst keeping comfortably within his monetary limits. But the absence of any comments on the exchange rate or manufacturing industry, particularly in the light of recent events in the West Midlands, was noticeable.

For inward investors, the UK has really become a very attractive proposition. The new rules allowing groups and consortiums to be traced through companies resident anywhere in the world extends the ICI v Colmer principle usefully. International groups often hold UK companies in separate parts of the group, perhaps as result of acquisitions, so it saves time and cost in not having to reorganise UK holdings.

With the changes to double tax relief and Dutch Mixers, the Budget had bad news for UK outgoing multinationals. But the changes on capital gains for companies, obviating the need to physically transfer assets to match gains with losses, and proposing the introduction of a roll-over relief for substantial 30% shareholdings next year, were both very sensible and long overdue. This may encourage some corporate rationalisation going forward to allow focus on core activities.

The chancellor is clearly in love with Silicon Valley and has grasped the importance of employee incentivisation. The All Employee Share Ownership Plan is a good improvement on the old approved profit sharing scheme (which disappears in 2002) although it may be easier for a public company to operate than a private company. The Enterprise Management Incentive scheme has now been extended to 15 key participants and the flexibility in the arrangements has already fostered considerable interest. But it was very disappointing that the chancellor did nothing concrete about the 12.2% NIC charge on unapproved share options though we have consultations to come.

The acceleration of taper relief over four years for business assets and especially the relaxation in the business asset definition were very welcome. This is excellent news for entrepreneurs and high net worth individuals wanting to invest into private ventures and it is also good news for all employee shareholders in public companies. It raises the thought whether public companies should employ their other shareholders one day a year as drinks waiters at the agm.

That apart, Joe Public is left with a slow taper to 24% on his plc shareholding. Nonetheless, the UK capital gains tax regime is now starting to look much better – though the door is slammed against five CGT loopholes. But where was the serious attempt to alleviate all the red tape surrounding business? SMEs in particular have become the unpaid tax collector for the chancellor – the prospect of a £50 discount for e filing PAYE returns does not sound like Hector sharing the burdens & benefits equally.

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