Budget Presentation
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Budget Highlights
George Osborne described his first Budget as ‘the unavoidable Budget’ in which spending cuts outweighed tax increases by a ratio of 77% spending cuts to 23% tax increases. The capital gains tax changes were less harsh than many feared. The new top rate of 28% is much less than the 40% or 50% rates that had been threatened and it was a relief that the annual exemption will stay at £10,100. The increase in the lifetime limit for entrepreneurs’ relief from £2 million to £5 million will be welcomed by business owners.
The planned reduction in corporation tax rates had been well trailed, while the cuts to capital allowances were less than some had predicted.
On pensions tax relief, the Government is reviewing the complex provisions that were to limit higher rate tax relief for people with high incomes from April 2011 and seems to be considering reducing the annual allowance from £255,000 to between £30,000 and £45,000. The Government will also abolish the current rules that effectively force people to buy annuities with their pension funds at age 75 and will consult on the details.
The big revenue raiser will be the VAT increase in the new year, but the main part of the package – the spending cuts – will be announced in the autumn.