Emergency Budget – What will affect you?

There is a lot of talk in the press at the moment about the new government’s first (emergency) budget which is set for 22 June.

We currently know a little of what to expect (there is a statement on tax within the coalition agreement) however there are still a number of areas where we must ‘expect the unexpected’.

The main area of speculation is Capital Gains Tax (CGT) where it is widely expect the rate will increase from the current rate of 18 per cent (10% after the application of Entrepreneurs Relief) possibly to 40% or even 50%.

It has also been widely tipped in the press that the level at which CGT starts to be paid (currently £10,100) could be cut to £2,000.

Some experts have estimated that it would mean the number of investors forced to pay CGT each year would quadruple to about a million and there is already evidence of second-home owners putting houses on the market in an attempt to avoid the tax. However, there are also suggestions that the tax change could be backdated meaning any sales pre budget would be caught.

Other potential tax changes include:

• An increase in the personal allowance from its current level of £6,475. The Liberal Democrats election policy was that this should be increased to £10,000 although it is doubtful that an increase to this level will come in one lump
• An increase in the rate of VAT. There is no mention of VAT in the coalition agreement however most economists have hotly tipped an increase
• A review of Child Tax Credit and Working Tax Credit

22 June will be an important day and we will keep you posted on any announcements as and when they happen. However anyone who has a second home or other assets we recommend you talk to your accountant or tax adviser as soon as possible.

Tim Pearce FCCA
Director

Crump Pearce & Co Ltd
Chartered Certified Accountants
43 Merstow Green
Evesham
Worcestershire
WR11 4BB

01386 49999
www.crumppearce.co.uk

The information in this article should not be relied on anyway and Crump Pearce & Co Ltd do not accept any liability what so ever for any loss caused as a result of decision made as a result of reading the article. Professional advice should always be sought.