Expected tax changes in the upcoming emergency budget

As announced, the Chancellor will deliver an “emergency Budget” on 22 June 2010.

The chances are that much of the focus will be on reducing state spending, but key areas where we expect tax changes include:

• increasing the CGT rate from 18% to 30%, 40% or perhaps even 50% - with or without a taper to reduce the tax on long-term gains

• making the CGT increase effective from 6 April 2010 (backdated), 22 June 2010 or 6 April 2011

• amending CGT entrepreneur’s relief

• increasing the standard rate of VAT to 19% or higher

• announcements on withdrawing all higher rate tax relief from pension savings

• announcements on reducing corporation tax rates

• announcements on increasing personal allowances

• announcements on national insurance rates from April 2011

• announcements on the taxation of individuals not domiciled in the UK

with changes to CGT and VAT probably the most likely for immediate effect

Although you will appreciate that these points are speculation, there is reason enough to believe that any of them could be under consideration. If you are making any plans which would be affected by these or any other changes which might be announced on 22 June, please speak with us as soon as possible.

As usual, we will be issuing a summary of Budget tax changes, prepared immediately after the Chancellor’s speech.