Emergency Budget 2010 At A Glance

The June Budget which was characterized as "the unavoidable Budget" and
the "Emergency Budget", contained a number of very important
announcements about tax.

These included:

- The increase in the rate of VAT from 17.5% to 20% to take effect in
the New Year.

- The increase in the personal allowance in the tax year 2011/12.

- The immediate increase in capital gains tax for higher rate income tax
payers from 18% to 28%.

- The rise in entrepreneurs’ relief for capital gains tax from 2 million
to 5 million.

- The progressive cuts in corporation tax over the next four years,
financed by cuts to capital allowances.

 
Small
business tax summary

• Corporation
  Tax rates cut in successive years, funded by reductions in
  Capital Allowance rates and reduced Annual Investment Allowance
• VAT
  rate increases to 20% from 4 January
• ‘Tax
  on jobs’ NIC rate rises stay: 13.8% for employers and 12% employees
• Reprieve
  for holiday lettings

 Personal
tax summary

 

Capital gains tax

• Higher
  rate tax payers will pay 28% from midnight on 22 June 2010
• Low and mid-income savers will continue to pay 18%
• CGT for entrepreneurs will be extended to the first £5m of lifetime
  gains

Personal allowances

• Personal allowance will be increased to £7,475 from April 2011,
  worth £170 to basic rate taxpayers (lower than the £10,000 predicted)

Pensions

• State pension to be relinked with earnings from April 2011
• Basic state pension to go up every year by highest of earnings,
  inflation or 2.5%
• The government will accelerate the increase in state pension age to
  66

Welfare Reform

" wasting the talents of millions and spending billions in the process"

Tax Credits > £40k earnings reduced

Child Benefit frozen for 3 years

Disability Living Allowance. Medical assessment for new and existing claimants from 2013.

Housing Benefit will be reformed and maximum limits will be introduced.