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Mavis Sargent provides her pocket guide to the Budget
Much as expected, the Budget contained a few small relieving measures for implementation in the near future and a number of promises for later dates.
It also contained a great number of anti-avoidance proposals; some relating to specific schemes and some rather more general in nature.
Stamp Duty
The much anticipated relief from Stamp Duty for lower priced residential properties turned out to be something of a damp squib. Purchasers of property costing less than £120,000 will pay no stamp duty, but from £120,001 upwards there is no relief and the amount payable is exactly as before.
Inheritance tax
There had been some hope of a substantial increase in the inheritance tax (IHT) threshold, or perhaps some more targeted relief, designed to recognise the effect of increased home prices.
In the event the only immediate change is an increase of £12,000 in the IHT nil rate band from 6 April 2005, with promises of further small increases over the following two years.
Hardly an adequate response
Income tax
In the past there would have been great interest in the amount of the various personal allowances, the rates of tax and the size of the various bands, but no more. There were no surprises and the only changes in allowances and bands were more or less in line with inflation.
The rates of tax remained unchanged
ISAs
ISA limits of £7,000 maximum and £3,000 cash, which were to decrease to £5,000 and £1,000 respectively from 6 April 2006, will now remain at their current level until 5 April 2010.
Employee benefits
Company car fuel benefits remain unchanged, and there are small extensions of relief for employer-provided training, computers and bicycles.
Trusts
Following last year's increased rate for UK trusts, the Budget contains two small relieving measures. A £500 standard rate band for discretionary and accumulation and maintenance trusts and a facility for trusts for the disabled to elect to treat the trust income as that of the beneficiary.
National insurance
There were no increases in rates of national insurance and the changes in the various thresholds and bands were roughly in line with inflation.
Anti-avoidance measures
Announcements on anti-avoidance measures formed a major part of the budget measures. They included changes in relation to:
- Capital Gains tax on non resident individuals and trusts, and new rules relating to the location of assets
- restrictions on film industry reliefs
- removal of reliefs for non residential properties in disadvantaged areas, and
- legislation to counter various specific schemes.
Small businesses
A consultation document published on Budget Day sets out the following immediate steps:
- the abolition of tax credits via employers between November 2005 and April 2006M
- a four-page small business return from April 2005. It is not clear whether this refers to the existing four-page SA return or to a new four-page CT return
- a redesigned form 42, to be published this month and intended to help newly incorporated companies. Whilst the form is intended to refer only to employment related shares the Inland Revenue interpret this very widely, so that every newly formed company is required to provide information on form 42 or some appropriate substitute
- a reduction in the time spent dealing with Inland Revenue and Customs inspections
- payment of VAT by direct debit with immediate effect, and
- a program to assess the impact of operational changes on small businesses.
The longer term objectives for small businesses include:
- the provision of information only once
- a range of flexible payment options to suit business needs
- no inspection without a reason
- a single point of contact for all tax affairs, and
- co-ordinated clear and helpful support.
Whether this can be achieved remains to be seen.
Mavis Sargent is an independent tax practitioner. | 
