Lambert Chapman LLP’s Paul Short reviews the Pre Budget Report

I am advised that our net debt, as a proportion of GDP, is at its highest level since the Napoleonic war and the Second World War.  At least then we had the excuse that we have saved Europe from domination by Napoleon and the world from domination by Hitler.  Now we are here as a simple consequence of Government incompetence and profligacy. 

Even now,  Labour does not get it.  We will not get out of trouble by trying to tax the rich (whoever they are) and giving bribes to the less well off.  The world is a different place from the 1970’s, when Labour last tried to increase tax rates.  The bankers will get around the 50% tax on bonuses.  Business owners will simply reduce income until the top rate of tax falls.  Others may well emigrate from the UK so that we get nothing at all.  The reality is that people are much more mobile these days and more people can change their tax jurisdiction, if they so wish.

As usual, the Government have exacerbated the problem by their own actions.  By having a low rate of capital gains tax of 18%, they have given a much needed boost to the off-shore tax avoidance industry and, indeed, there will be plenty of schemes on UK soil to convert income into capital. 

There will be plenty of work for me to do over the coming months but I am still fearful about where this country is going under this shower (that’s the Government, not the weather).

Lambert Chapman LLP’s John Smith-Daye reviews the Pre Budget Report

The PBR brought back many memories of the past – I can only just recall being as excited (not!) by the delivery of a speech by a politician, one John Major,  and if “Spitting Image” had still been around, they would no doubt have broadcast Mr Darling in a strong shade of grey. I’m sorry for being so cynical, it must be an age thing, but it was unlikely that he would introduce anything drastic so soon before an election.

So was there anything that excited me? Am I bothered that bingo duty is to be reduced from 22% to 20%? Do I care that pubs, restaurants and the like can continue to apply the VAT rate of 15% until 6am or the time that they close on 1^st Jan 2010, whichever is earlier? I think not.

I continue to be disappointed about the use of National Insurance as a method of tweaking Government income – why not just come clean, scrap it, and adjust the rate of income tax instead? Another increase being announced is not going to encourage employers to take on staff, or employees to work harder.

I had previously predicted that VAT would stay at 15%, and now have to eat my words – I really thought that the Government would try to sweeten the electorate by extending the reduction. It sticks in my throat  to admit that I’m wrong sometimes!

Lambert Chapman LLP’s Lisa Potter reviews the Pre Budget Report

A budget to hinder the UK’s recovery

This pre-budget report served only to protect the re-election chances of the current government and not to solve the economic disaster that we are in.   The report should have been about supporting recovery and not hindering it by taxing jobs and stretching out into the future any serious attempt to get to grips on the escalating levels of public borrowing.

It appears that the chancellor is trying to tax his way out of the situation instead of attacking public spending which is what is really needed.

Key points from report:

• VAT increase to 17.5% from 1^st Jan – personally surprised as I thought would be re-introduced at a higher level, maybe this will be a welcome gift from the new government?
• Additional taxation on banker’s bonuses set to generate £550m of extra revenue. Optimistic or pessimistic is the question, surely if you owned a business about to experience a super tax you simply wouldn’t pay the bonus but find a way round it as there is always one!
• A boost for the car industry following the introduction of the tax exemption of an electric car for company car purposes for 5 years and 100% capital allowances on electric vans.   A tick in the box for the green considerations but until heavy investment is made in the car industry to really develop these vehicles so that consumers want to buy them a tick is all it is.

Little to get excited about, a lot to worry about.