Following today’s Emergency Budget by George Osborne, I have outlined below some of the main tax points raised that you may find interesting:

• VAT will increase to 20% on 4 January 2011. The reduced rate remains at 5% Personal Allowances for income tax will be increased by £1,000 to £7,475 in 2011/12. The basic rate threshold will be reduced, so higher rate tax payers will not benefit from this increase
• National Insurance Contribution rates will increase by 1% as previously proposed. However, this will be offset by increases to the relevant thresholds above indexation
• New businesses (outside of London and the South East) will be entitled to an NIC Holiday when they take on up to 10 employees in their first year. Employers will not be required to pay the first £5,000 of Class 1 Employers’ NIC for each employee
• The main rate of corporation tax will be reduced from the current rate of 28% by 1% per annum from April 2011, down to 24% in 2014
• Small companies rate will be reduced to 20% with effect from 1 April 2011
• Capital Allowance rates are being cut by 2%, resulting in writing down allowance for Plant & Machinery of 18%, and 8% for special rate assets. This will come into force from 1 April 2012
• The Annual Investment Allowance will be cut to £25,000 from April 2012
• A new rate of Capital Gains Tax, 28%, is being introduced with immediate effect. This will apply to disposals by individuals paying income tax at the higher rate. Individuals within the basic rate band will continue to pay CGT at 18%
• Entrepreneurs’ Relief remains in practical terms (if changed technically), and has actually been extended to a lifetime limit of £5m. Gains qualifying for Entrepreneurs’ Relief will continue to pay tax at 10%, even those which would otherwise be subject to the higher 28% rate
• The Furnished Holiday Lettings regime, previously announced to cease from 2010/11, will now not be withdrawn
• The Chancellor also announced a consultation on the planned Pension regime changes due to come into effect in 2011/12. The requirement to purchase an annuity at 75 will be ended by 2011/12
• A large number of benefits and credits have frozen or reduced
• The proposed increase in cider duty, and the implementation of a telephone landline duty, have been scrapped

The Chancellor has gone with a “Big Bang” approach, which we can only hope will mean that no additional cuts or tax increases will be necessary in the short term.

For those of you waiting for my fashion commentary, Mr Osborne went with a simple dark green tie. He was flanked by 2 Lib-Dems, who went with bright yellow party colours, and a conservative (small c!) blue and white stripe. Certainly no red!

I am conscious that there are a significant number of announcements above which may affect you, and that I have kept my comments brief. If you have any questions at all, please feel free to get in touch with either myself or your usual Craig Corporate contact.