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2nd Dec 2009
The wish list are of course valuable. As Brian Tracy once said "If you don’t set goals for yourself, you are doomed to work to achieve the goals of someone else.”
But realistically I think you are looking at a slight adjustment to the disparity of rate of tax on capital gains. 18% sticks out like a sore thumb. In the interests of equity and to erode the gulf between how gains and income are taxed generating pressures on advisors to formulate artificial arrangements to treat income as pseudo gain. It may be revolutionary, but why not tax capital gains as the top slice of income. I suspect not, rather the introduction of an intermediate rather between the current 18% and the higher rate of tax at 50%. 25-30% perhaps?
Small companies rate might be increased in this pre-budget, but David Cameron has already pledged to reduce it to 20% in the budget he would put into place within 50 days if they win the next election. We are certainly looking at short-termism. Something activity discouraged in the banking sector but it is the current reality of the tax framework. Likewise of the full rate he has indicated a rate of 25%. I appreciate in the financial turmoil 12 months is a long time. However in this climate I envisage businesses and their advisors will look to defer liabilities until the new regime comes in for those areas of tax hardest hit.
Personally I would like to see a backtrack on the removal of the personal allowance for those on over £100,000 as this creates a kink in the marginal rates of tax, 40%, 60%, 40%, then 50%. That serves no purpose. Poorly executed legislation.
The other area where taxpayers may seemingly hit could be a freeze on the threshold of IHT. This is a much muted point which would be out of political aims rather than to fill the government coffers. The aim to illustrate the elitist nature of the conservative £1m threshold per person pledge.
Whatever happens, as always there will be a whole raft of anti-avoidance provisions, a few surprises and it will be just the beginning of the period of flux and change in the tax world.