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

Before I reveal to the nation the winning Lottery Numbers for next Saturday, I would like to publish again a short set of notes that I sent to Nick Forsyth prior to the Budget Speech ……..  

The time is now 11.30 am. The Budget is at 12.30 pm. Let’s see if I can comment using my crystal ball…….

 1. VAT – not unexpectedly, VAT has been increased to 20%  – this is an easy way to squeeze the consumer, just a little bit, not too much that it hurts badly, but just enough to bring a significant amount into the Treasury.

 2. Capital Gains Tax – this area has been much discussed beforehand, my feeling is that it would have been too drastic to increase the rate across the board. So the limited increase, mainly affecting non-business assets, is to be seen as a rise that is not as unacceptable as it could have been.

 3. Personal allowances – an increase above inflation, eventually to a level of £10,000 – a political move that is likely to be seen as beneficial.

 4. National insurance – streamlining of this “tax by any other name”, which is long overdue.

 5. Duties on petrol, alcohol – a rise that is blamed on the poor stewardship of the Labour Party, meaning that revenue needed to be increased.

 6. Corporation tax – an attempt at boosting the entrepreneurial sector – but not enough to have any major impact.

 7. Income tax – no major change, not a surprise really.

 8. Most of the Budget changes will be aimed at cost cutting rather than revenue raising – its easier to do this and blame the previous administration than to hit the electorate too hard in the pocket.

 My “predictions” were mainly correct (only items 4 & 5 omitted, for the time being anyway), hardly surprising given the amount of advance publicity. It was good to note that some thought had been given to the measures to be introduced, but slightly disappointing to hear the number of times that the previous Government were blamed for the mess we are in.

Yes, I know it is their fault at least partly, but there are major worldwide factors in the equation too. Perhaps we can look forward to a little less spin from this Chancellor? Who knows!

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 John Smith-Daye says, “I am not a gambling man but……”

As anyone who knows me will tell you, I am a typical male chartered accountant – I have been called “tight fisted”, “mean”, even “boring and unadventurous” – I prefer to call myself “prudent” and “cautious”, two words much used by our beloved (?) Prime Minister, particularly during his stint as Chancellor of the Exchequer.

However, there is an opportunity coming up that may to some be considered a gamble, but to me is all but a dead cert. I am willing to bet my monthly pocket money – yes, up to £2.50 – on the VAT rate remaining at 15% beyond the end of the year. I have heard rumours that the temporary reduction might be extended by a few days to help the retail industry with the January sales.

But – Lo! What is that on the horizon? Do I see an election in the very near future? And do I perhaps feel that the Government may try to win votes by currying favour with the Electorate At Large? And am I really a cynic?

Answers on a postcard please, with the usual £10 note stuck to it with sticky tape, to me at our Maldon office. Don’t send them to my home address, please – my wife might get hold of them.

So will John be right? If you haven’t got a postcard handy leave him a note below: