Alastair Darling deliver’s Pre-Election Budget
Alastair Darling and the Labour government yesterday delivered a Pre-Election Budget that promised much but gave away little, says Thames Valley accountants and business advisers James Cowper.
Chris Lee, a partner at James Cowper in Reading said: “Targeting bank bonuses are designed to appeal to the average man on the street, who it must be remembered, has struggled over the past 18 months. These measures are unlikely to raise significant revenues to help the government meet its borrowing requirements.”
Stephen Barratt, a director in the firm’s Private Client team in Newbury adds: “There will be considerable disappointment that the government reversed its earlier promise to increase IHT thresholds to £350,000. It is true that IHT thresholds will affect the wealthier the most – or in Alastair Darling’s words “those with the broadest shoulders” – but he would do well to remember that house prices are still high in the Thames Valley and, despite recent drops, house prices are showing signs of increasing again. There are many families that will now be caught in the IHT trap.”
The increases in National Insurance Contributions by one penny in the pound for everyone earning more than £20,000 pa will also prove to be unpopular, particularly withmiddle income families and small business owners, who have already suffered the most over the past 18 months.
“However, this is a little good news,” says Chris Lee. “It is excellent news that the government has not increased the rate of Corporation Tax for small business and we welcome the extension of the time to pay tax regime, allowing companies to defer payment of their tax. We also welcome the increased funding for companies in the high tech sector, which is particularly pertinent to the Thames Valley.”
There will also be a sigh of relief from the agricultural and rural community, as Stephen Barratt explains: “There have long been rumours that Agricultural Property Relief was a target of the Government. Alastair Darling recognises that APR plays an important role in the future financial security of farming estates and he has had the good sense to leave alone.
“However the National Insurance rate increase will affect many farming families and will be most unwelcome in these volatile times for the industry. We would urge farms and agricultural to revisit any tax planning measures before the Budget in the New Year in case there is a change of heart.”
Chris Lee, James Cowper LLP, Tel: 0118 959 0261 or email clee@jamescowper.co.uk
10.12.2009