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As well as doubling the inheritance tax threshold to £600,000 and introducing non-domicile taxes, the chancellor, Alistair Darling, announced that capital gains tax is to be increased from a rate of 10% to 18% in his pre-Budget report (PBR).
Grant Thornton corporate tax partner Stephen Quest says the increase will be a “major disincentive” for private equity firms to take risks or even to remain in the UK.
John Walker, Federation of Small Businesses policy chairman, calls the PBR “disappointing” and likely to “increase the financial burdens on small businesses at a time when they are contributing more than ever to the UK economy”.
The construction industry also loses out in the PBR by the withdrawal of the national insurance contribution exemption relating to holiday pay for employees, says Grant Thornton construction industry expert Kathryn Hiddleston.
“The net effect of today’s change means the industry, which already operates under very tight margins, will have to find up to a further £150m per year,” she says. The construction industry has until 30 October 2012 to change its systems and procedures.
The legal aid budget is to be cut by one-tenth from its current £2bn under plans outlined in the 2007 Comprehensive Spending Review. JUSTICE director Roger Smith says: “Cuts of this magnitude are unachievable without massive reductions of service.”
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