Headlines
Click here for a printable version of the Pre-Budget Report Headlines.
Chancellor looks to claw Pre Budget Report spend back from High
Net Worth Individuals
The UK's top earners will bear the brunt of the Government's
moves to boost the economy in today's Pre Budget Report, according
to financial and business advisers at Grant Thornton. From
April 2010, the personal allowance for those earning more than
£100,000 will be halved and then reduced to zero from 2011 for
those earning over £140,000, creating an additional £2.15bn in tax
receipts for the Treasury.
Chancellor's Pre-Budget Report increases borrowing and cuts
taxes by £20 Billion to kick start economy
We have negative economic growth, serious adjustments happening
in the housing market, a weakening pound and consumer confidence
falling off a cliff. This was a bleak PBR for bleak times.The
economy is now almost certainly in a recession for the first time
since 1992. The Chancellor has responded to this in three ways.
Firstly he has increased the personal tax allowance for low income
families, he has reduced VAT by 2.5% and lastly he has increased
public borrowing to £78 billion for 2008/9 and to £118 billion in
2009/10.
Chancellor gives green light to Multinational companies and
provides incentives to MNCs to stay in the UK
The Government's move on foreign dividend exemption will have a
positive impact for multinational companies (MNCs) with UK holding
companies, however more still needs to be done on simplifying the
corporate taxation system if the UK is to revive its
competitiveness. Companies can now bring foreign profits from
fellow group companies into the UK without suffering additional UK
tax, providing a boost in investment to the economy of billions of
pounds. Today's measures are generally to be applauded. Many
companies will regret that such positive moves have only come about
in such difficult economic circumstances. However, it is
unfortunate that these measures will only apply to medium and large
companies, as small companies are specifically excluded.
Low income earners
Darling's tax cuts may help low income earners now but
tax rises are not far away
With the Government faced with providing answers to help low
income earners during the fiercest economic crisis of the century,
Chancellor Alistair Darling has used today's Pre -Budget Report
(PBR) to present New Labour as being back in touch with its grass
roots supporters and showing the way to help ailing low income
earners have more access to cash.
Small business/VAT reduction
Too little too late for many small and medium
enterprises
The Chancellor's announcement on initiatives to help small and
medium enterprises (SMEs) by putting in place measures to tide
businesses over during the forthcoming recession comes at a time
when many business owners have no other viable option, says leading
business and financial adviser, Grant Thornton.
The Chancellor's decision to reduce the current standard rate of
VAT, aimed at kick starting the economy, will have winners and
losers amongst small to medium businesses. The winners will be
those businesses that cannot fully reclaim VAT, such as the
Independent Financial Advisor, who should see a reduction in the
costs of running his business. However, for many, a reduction in
the current rate of 17.5 per cent to 15 per cent could create a
cash flow disadvantage for businesses who collect their debts
promptly. They will have less money on deposit in their accounts to
use as working capital before the VAT is paid over to HMRC on a
quarterly basis.