Taking Account

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What can we expect after 6 May 2010

May 2010

At the time of going to press we do not know who will lead the Government for the next few years, but whoever, it will be a crucial time for UK plc. All parties seem to agree that the new Parliament will need to deal with the reduction in our national debt. Accordingly any tax concessions are likely to be eclipsed by increased taxation in other areas. We have listed below some of the taxes that might change post the May election:

  • VAT - not confirmed but there is speculation that the standard rate will be increased from its current 17.5% to possibly 20%.
  • Corporation Tax - the Conservative Party have announced a 1% reduction.
  • National Insurance - the Conservatives have pledged to cancel the 1% increase due from 6 April 2011.
  • New higher rate taxes? In addition to the changes already in place for high income earners, the 50% higher rate, loss of personal allowances and restrictions on pension payment tax relief, we may see further changes - the so-called Robin Hood taxes.
  • Increases in annual tax-free allowances for income tax purposes. The Liberal Democrats have promised a tax-free £10,000 allowance for all.
  • Although the expected change to the tax status of Furnished Holiday Lets property was abandoned prior to the close of Parliament, the measure will probably be re-introduced following the election.
  • Capital Gains Tax - again there is speculation that the current 18% CGT rate will be increased to discourage schemes that seek to have income reclassified as capital gains avoiding the higher rates of income tax.

We shall have to wait and see. As soon as new information becomes available following the election we will include the changes in our newsletter

Hilton Sharp & Clarke