Clarity. Gain a precise view of the Pre-Budget Report 2008
Pre-Budget Report 2008
The Chancellor sat down after an hour, when he delivered a road map for tax reductions now, followed by tax increases in 2010 and 2011.
Business will be pleased to see the Foreign Profits announcements, although there isn't yet much detail available. There will be a dividend exemption in 2009, together with a worldwide debt cap on interest deductions, which finances it. However, the most important announcement is contained in letters to the CBI and the Hundred Group, where the move to a territorial tax base (taxing only UK source profits) and the reduction in the scope of the CFC rules will be welcomed.
Small business gets a wide ranging package of extra finance, including a scheme to spread tax payments and a new 3 year loss carry-back rule for losses up to £50,000. In addition, the increase in small companies rate to 22% is deferred a year, to 2010.
We shall all start paying for the tax reductions in 2011, assuming the Government is re-elected. National Insurance contributions will rise by 0.5% for both employers and employees, although the lower rate threshold will be increased to match the new personal allowance. Higher rate taxpayers will see personal allowances cut (for those earning over £ 100,000) and eliminated (for those earning over £140,000). In addition, there will be a new 45% rate for those earning over £150,000.
In the meantime, the Government's message is 'spend, spend spend' at least for the next 13 months, to benefit from the reduced 15% VAT rate.
- Deloitte comments on changes to taxation of foreign profits
- Welcome relief for UK's entrepreneurs in Pre-Budget Report
- Spend, spend, spend now, pay later
- VAT cut to take 53 pence off a £50 shopping basket