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  3. Brown's Pre-Budget Report Slaps North Sea Oil

Brown's Pre-Budget Report Slaps North Sea Oil

by Amanda Banks,, London

07 December 2005

UK Chancellor Gordon Brown presented his annual 'pre-budget' report on Monday, lowering his forecast for growth to 1.75% per cent, and doubling the supplementary tax on North Sea oil companies to 20%, raising GBP3bn in extra revenue.

The zero tax rate for small companies is to be scrapped, costing many companies an extra GBP1,900 a year. However, R&D tax credits to be extended, and the enhanced 50% first year allowance for small business investment in plant and machinery will be reintroduced for the period 1st April 2006 to 31st March 2007.

Responding to cries of anguish from the film production sector, there will be a new film tax credit worth up to 16% to big-budget productions and 20% for smaller films.

Despite previous experience with the unsuccessful DLT (Development Land Tax) in the 1970s, the Chancellor has issued a consultation paper proposing a “Planning Gain Supplement” - a new local planning levy on the value of land set aside for redevelopment, to be re-invested in the community. It would be payable by developers at the commencement of development. To the extent that it reduces the price paid by developers, it will effectively be borne by landowners but it will reduce the capital gains on which they pay tax. The tax would not take effect until 2008.

Further clampdowns on tax planning schemes are in the pipeline, said the Chancellor, including a focus on accounting for non-commercial capital losses.

Disappointingly for people with their own pension schemes, the new SIPPs regime will not admit fine wines, antiques, classic cars or residential property as permitted assets.

Among a raft of minor measures affecting personal taxation, the Government will give local councils an additional GBP1bn next year to mitigate rises in Council Tax.

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