UK Chancellor Presents Pre-Election Budget

Jason Gorringe, Tax-News.com, London

08 March 2001

Gordon Brown presented his 2001 budget yesterday in the House of Commons, and as expected he concentrated on pre-election gestures towards voters. Still he could well afford to, with the UK's 2000/2001 surplus now expected to come in at a surprisingly high £23bn. Of course it's good that there is a surplus, but any businessman will tell you that the extra money has come out of his own pockets. The only part of the business world really to benefit from Mr Brown's largesse yesterday was the part that has votes, ie the small trader - the VAT limit was raised to £54,000, and simpler rules will apply to companies with turnover up to £600,000.

Headline elements in the budget included an extension of the lowest income tax band - income tax changes altogether give back £1bn. Other important changes include money for urban regeneration, a new apprenticeship regime, an increase in the working families tax credit and the childcare credit, reduced vehicle excise duty, and a new children's tax credit. Maternity pay is increased, and there will be statutory paternity pay.

The highest-profile announcement affecting business is the replacement of betting duty with a tax on gross profits. As expected, there are new rules for onshore 'mixing' of foreign dividend streams, but the hoped-for deferral of capital gains tax on the disposal of subsidiaries has been itself deferred, while there is further consultation on a possible participation exemption.

For full details of these and other changes affecting business, see lowtax.net's new UK International Tax Site. Launched today, the site has a complete analysis of the major tax issues affecting international companies in the UK, plus UK tax news stories and the lowtax offshore-onshore knowledge base of UK investment incentives.

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