What the country needs today is a Budget to mend the economy and a focus on cutting public spending at the right time. However, these measures do not go far enough.
The opportunity to create new tax law in the Finance Bill this year to address such present issues will be subject to who wins the election. If the election results in change, then the current Government’s ability to pass all proposed changes to tax legislation will inevitably be severely limited. If the incumbent stays in power, we can expect that proposed changes to the Budget will ultimately become law.
Tax policy will likely become a highly contested debate in the event of a hung Parliament later in the year. Any uncertainty could shake companies’ faith in the UK as a suitable place for their headquarters.
The Chancellor has resisted the temptation to apply further tax hikes to higher rate taxpayers, despite such measures being popular with potential voters. Perhaps the real threat of a brain drain has been recognised. However, we still have a number of legacy tax provisions hitting taxpayers in 2010.
Expected major changes include:
- Anti-avoidance measures aimed at those promoting tax avoidance schemes and those who introduce their clients to notifiable schemes
- Increased powers for HMRC to gather information pertaining to tax affairs
- Commitment to and concessions for small and medium-sized enterprises
- An increase in stamp duty to five per cent on the purchase of homes exceeding £1m in value
Taxand Members respond:
- “The changes for smaller businesses are unimpressive and will do little to increase the attractiveness of the UK as a global business centre.” – Rebecca Hoover, Taxand US
- “There are policing provisions that acknowledge the Government is taxing their citizens too onerously. It is nice to see the SMEs getting a break, given that they will be all that’s left in the UK, if the Government keeps following its current strategy.” – Martin Phelan, Taxand Ireland
- “The clampdown on anti-avoidance measures and the increased powers of the tax authorities have been witnessed in Germany in recent years. The measures have had varied degrees of success.” – Arianne Jerey-Hener, Taxand Germany
- “Not a very exciting Budget and we are still waiting to hear on the much publicised ‘patent box’ regime. What is taking so long?” –Marc Sanders, Taxand Netherlands
- "The budget seems to concentrate on trying to get a bigger share of a shrinking pie, rather than creating an environment where the pie will get bigger.” – Keith O’Donnell, Taxand Luxembourg
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A&M Taxand UK 2010 Budget (PDF)
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