The Chancellor, Alistair Darling, presented his 2010 Budget statement on 24 March.
A Budget for the Polls?
Alistair Darling delivered his final Budget before the UK goes to the polls, possibly in as little as six weeks time. Despite the fact that it was predicted to be a short Budget, with another surely to come following the General Election, the Chancellor managed to keep his speech going for a lengthy 60 minutes. But what, if anything, was said?
A large proportion of his speech was aimed at the economy in general and, on a positive side, things are not as bad as he had previously anticipated. Public sector borrowing is £11 billion down on predicted figures, with the aim for that to be halved within the next four years.
Growth is budgeted as being 1 to 1.5% for 2010, and 3 to 3.5% in 2011, the latter being a downward revision from the Chancellor’s previous figures.
The focus of the Budget was said to be to keep the economy moving in the right direction. This is to be achieved by no immediate cuts to overall public sector spending, forcing RBS and Lloyds to lend £94 billion and offering some minor tax breaks to small businesses. The tax breaks are to be paid for by switching funding from other areas and the additional income generated from the tax on banker’s bonuses, which has already raised £2 billion, which, according to the Chancellor, is twice more than originally forecast.
One such tax break is the raising of the Annual Investment Allowance from £50,000 to £100,000, which provides 100% tax relief on qualifying capital expenditure in any financial year. Also, the Time to Pay arrangement (allowing taxpayers to spread their tax payments) is to continue for the whole of the next Parliament.
There was good news for Entrepreneurs with a doubling of the relief from £1 million to £2 million, enabling business owners to pay a reduced level of 10% capital gains tax on the first £2 million of gains. More good news was that there was no announcement, “today”, of a raise in the main rate of 18% capital gains tax. Who knows what tomorrow may bring.
There was also some positive news for first time home buyers, with exemption from Stamp Duty Land Tax up to £250,000, from midnight, to be funded by a new 5% rate for properties over £1m to be brought in from 2011/12.
Duty on alcohol is to increase by 2% above inflation, whilst cider drinkers were left spluttering with a 10% above inflation rise due to the perceived inequality. The fuel duty raises were staged with 1p rises in April, October and January 2011, which it is anticipated will cost the Treasury £0.5 billion.
The Budget didn’t deliver any really bad news, most of it having already been announced in previous Budgets, or Pre Budget Reports. This leaves you with a sense that maybe worse is to come, but that sort of bad news certainly could not be delivered so close to a General Election.
Was this a Budget for the economy, or a Party Political Broadcast Budget? We shall have to wait and see when we go to the polls.