BUDGET 2000

We set out below first comments on the Budget presented by our esteemed Chancellor on 21st March. As always the speech contained a mixture of expected items, and the not so expected. It is part of the ‘game’ that there has to be a surprise in there somewhere. As every year it was most disappointing to find no sign of the government really easing the burdens of tax administration on small businesses and abolishing National Insurance. One word of caution – the most fascinating thing in the 1999 Budget was not even mentioned in the speech (IR35 Personal Service Company Oppression Regime). There were several ambiguities and allusions in the Chancellors speech which will only be clarified when the Finance Bill itself is published. In the meantime commentators will speculate, and earn loot doing it.

these notes and linked files are available as a Zipfile here

	INCOME TAX	As announced in the last budget the basic rate of income tax has dropped by 1% from 23 to 22%
		Personal allowances have risen in line with inflation from £4,335 to £4,385
		10% band on first £1,520 [1999/00 £0-1,500]
		22% band next £28,400 [1999/00 23% £1,501-28,000]
		40% band all over £28,400 [ 1999/00 over £28,000]
	CORPORATION TAX	Small companies rate remains at 20% on profits to £300,000[1999/00 £300,000].  Large companies (Abell Morliss clients) rate remains 30%
		The previously announced lower 10% rate starts for the first £10,000 of profits, and then tapering up to 20% etc.
	CAPITAL ALLOWANCES	First Year allowances of 40% continue permanently (i.e. until the next budget). Super new 100% FYA for e-commerce investment. Ring Abell Morliss for irresistible kit offers.
	INHERITANCE TAX	Death rate of IHT stays at 40% commencing with estates over £234,000(1999/00 £231,000)
	CAPITAL GAINS TAX	The annual exemption (which is an extra personal allowance for those fortunate enough to achieve Capital Gains each year) goes up from £7,100 to £7,200. New lower effective rate of 10% on long-term gains.
	EMPLOYEE SHARE SCHEMES	Easing of restrictions to permit budding capitalists get their fiscal feet on ladder of share ownership in their benevolent employers. This will help start-ups looking to inspire staff other than with cash.
	STAMP DUTY	Everyone expected house sellers/buyers to be caned so no surprises here. Still at least it should dent the profits of estate agents
		Stamp Duty on house sales is un-changed at 1% on property between £60,000 and £250,000 (1999/00 1% between £60,000 and £250,000)
		House sales from £250,000 to £500,000 the rate is now 3%  (1999/00 £250,000- 500,000 2½ %)
		House sales above £500,000 the rate is now 4%  (1999/00 £500,000+ 3½ %)
	VAT	The registration limit goes up from £51,000 to £52,000
		The standard rate of VAT sadly remains at 17.5% (for those without calculators)
	BOOZE/FAGS	The Chancellor has held off spirits this year – partly to throw an inadequate olive branch to the poor retailers of Kent/Essex/Sussex who can no longer sell such items due to the ‘booze cruises’. Wine is up by 4p bottle and beer by 1p per pint.
		Tobacco on the other hand is still regarded as fair game so 20 cigs is up by 25p. He alleges the money will all go to NHS (i.e. he will put less to NHS from other tax revenues – why do politicians habitually tell lies?)
	COMPANY CARS	The caning continues under present rules until 5.4.2002. So no need to worry about the new rules as we have a] two more budgets b] one general election c] probably a new chancellor d] collapse of UK car industry all to happen before then.  Nice to see the Revenue hates diesel-powered cars even more than petrol unlike our more-enlightened continental brothers/sisters.
		Petrol/diesel up by 2p litre
	IR35	As anticipated the dreadful new civil servant job-creating regime comes in from 6^th April 2000. The first payments of the related ‘PAYE’ will be due on 19^th April 2001.
	OTHER	As we said the Chancellor always likes to please himself with a little surprise or two…..
		Companies can now make charitable donations and get them allowed as expenses in their accounts.
		Research & Development expenditure by small companies now qualifies for tax relief at 150% of the amount spent. However the Revenue are presently dreaming up millions of tedious rules, regulations, forms, procedures, systems to minimize the number of successful users of this relief. For a start you have to spend at least £25k. a year to even get in!!
		There was something in the speech about 0.3% off Employers NIC but no mention in the Revenue press releases because of course we all know that NIC is not Tax. This appears to be linked to the introduction of more environment taxes in the future at an un-specified date – so why raise the subject and waste our time?
		Not even in the speech was the slashing of VAT on ladies sanitary products to 5%, but only from 1.1.01. A] why not abolish it altogether? B] apparently the delay is to allow HMC&E to come up with a list of items to be included in this concession C] they allege this indicates the government’s drive to equality everywhere – search me how
		…oh and he mumbled about electronic filing discounts but there is no sign of how it is really going to work in the real world. The Revenue have no idea either, and frankly what’s this got to do with the Budget anyway?
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