Thursday, 25 March 2010

Budget 2009

Government Budget Statement
Spring 2009 – c. number 22

“meeting the aspirations of the British people”

Chancellor rearranges the deckchairs…..…despite everyone pointing out the iceberg we had just hit amidships

abell morliss
chartered accountants

accounting for successes

phone +44(0)207 719 8282
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PDF of this briefing note here………..bud09 spring.pdf

We set out below comments on the Spring Budget presented by our Chancellor in April 2009. The Budget was as usual, waffle by the uninformed (i.e. non-accountants/economists) imposing on the masses what they don’t want. The only truth told in the statement was that we are in a recession, something he refused to acknowledge last time.
Thankfully we are not at present being asked to pay back all the ludicrous government borrowing incurred since c. 2000, and now accelerating out of control at an astounding rate. This does show the foolhardiness of borrowing to your limit when the going is good – 1997-2006 – and who was holding the fiscal reins when this was done in our name? Oh Gordon B., as there is now no cushion to use up when the going gets tough. Our national debt as a %of gdp should have been running way below the max allowed by our masters in Bruxelles when the going was good, so that we could now notch things up a bit without hysteria in all quarters. Did you know that in the next 5 years the government is going to double the entire extant amount of the government debt i.e. all the money ever borrowed net before.
We should really be being clobbered by tax increases now, supported by a massive reining in of the ridiculous levels of government spending which we have incurred over the last few years. Even in this appalling economic situation the government has merely reduced the real rate of growth of government spending, not even halted it.
When you look through there is no real statement of how we are going to clear the unbelievable amounts of debt being incurred, really because no one has a clue how we are going to manage it within a vaguely imaginable timeframe. The only real hope is that the ‘astute investments’ in the bombed-out British banks come good, and we can flog the shares for massive profits in about 5 years time to pay it all off. Otherwise plan B is that we will have a PSDR liability of £10bn. per year for the lifetime of our grandchildren.


ITEM Government Abell Morliss Comment
Corporation Tax Rate to remain at 21% up to £300,000 profits28% over that We should fix on 20% and 25% with a long-term commitment to keep rates un-changed, to steal some international attention
Income Tax Rates Bands rise:-20% is the basic band for 09/10 up to £37,400 from £34,80040% on excessNB. Savings income up to £2,440 (08/09 2,320) taxed at 10% still NB. Don’t forget that the effective max. rate of tax is already 40% plus 1% NIC making 41%. In 2010/11 Darlings last Budget will introduce a 50% (+1%) on income above £150,000, he saysAlso a sly reduction in personal allowance for incomes over £100,000
Personal Allowances New rate from 6.4.09 is £6,475 (from £6,035)
Notional Insurance 11% serfs up to £44,000 salary, then only 1% everything above12.8% paid by the rulers Still not abolished !It is crazy not to incorporate this into our standard tax systems. Government spouts about reducing red tape, and this would massively help business admin at the stroke of a pen
Capital Gains Tax Rate remains at 18%10% for selling business assets Our views are controversial here, so no comment
Annual exempt amount up from £9,600 to £10,100 This is another personal allowance if you can make the gains
VAT Stays at 15% to 31.12.09 then back to 17.5% Allegedly…1.7.10 more likely à after the (May 2010) election
Inheritance Tax Threshold up to £325,000 (from £312,000) Must still carry on holding off dying until a sensible set of graduated bands are introduced. Did you know that HMRC asserts that less than 10% of all people dying each year pay IHT?
Capital Allowances £50,000 annual investment allowance remains This is ‘French’ for 100% 1st year allowance on 1st £50k of Capital Investment
40% FYA introduced for expenditure above IA level for one year only More messing about, but it is a step in right direction. BUT businesses need this long-term so they can invest with confidence
Vans Company Vans Still the best tax-free business perk going, thanks to Gordon’s changes a while back. Especially if you buy a double-cab pickup with CD multi-changer, climate control and leather seats - Dohh!
Tax Evasion Yet another clampdown to net in £10-15 bn. (allegedly) Apparently the HMIT & DSS are still not trying very hard to collect all the tax due and to stop all the fraud we indulge in, and are surrounded by.
Civil Service Continued headcount reductions in next few years We are paying a fortune for semi-employed civil servants with little to do, so the axe is being wielded – or so Government says. Quite how it is to be done is most intriguing…
Enterprise The usual warm words Little of actual content here
FUEL Fuel not going up at the moment.2p promised on 1st Sept But the next government will jack it up big-time to help balance the hole in the books. There will be a Budget very soon after the general election in May 2010, and it will be ouch!
BOOZE Beer & Cider up 1p per pintWine up 4p per bottle5p on sparkling wineSpirits 13p change Still not enough of us go to France to buy our drinks apparently, so we need bigger incentives
FAGS Up 7p per packet Ditto
Stamp Duty Extended for 0% on up to £175,000 house sales.1% up to £250,0003% to £500,0004% Beckhams Goes back to £125,000 band on 1.1.010 (allegedly)
Council Tax Businesses get this years increase spread over next 3 years zzz… Pointless tiny concession that has created havoc at councils as it was announced on 31.3.09 only once all the bills had gone out. Are Muppets in charge?
Bingo No vat on charges now The government gambles big-time, so we are to be encouraged also.
ISA The annual allowance is up to £10,200 (£7,200) …but it’s pointless saving with interest rates soooo low.
Car Scrappage Government has introduced a £2,000 trade-in allowance if you buy a new car and scrap the old one This is financed only half by government, and half very reluctantly by manufacturers.This measure is very un-green, and wasteful of our precious resources, and pointless as it will only have a marginal effect on decisions. And of course another fraud opportunity is created as you have to “own” the vehicle for more than 12 months, but as we have repeatedly been told by DVLA “the registration certificate is not evidence of ownership” zzzzz. So it’s your (truthful) word against the stony grant-giver
Pensions Higher-rate relief on contributions abolished for 2010/11+ What about withdrawing Corporation Tax relief on Goodwinesque contributions by employers ?– that’s who we should be clobbering
PSBR The mountain for 2009/10 is guessed at £175 billion And for loads more years to come, and then when we’ve finished borrowing this we have to start slooooowly paying it back. To join the €uro we need PSBR to be less than 3% of GDP. Projection for next few years is much higher at 12%
Red Tape To be abolished Again !
Other To come Once Finance Bill is published there will be more secrets revealed…..

Nothing about eliminating the tax-free status of air travel to reduce the unsupportable growth in London airports. E.g. maybe making airlines pay fuel duty on their aviation fuel. - after all international lorries do.
Didn’t hear anything about a consortium to finish off the replacement for Concorde, or tax relief for assisting the rest of Britain’s superb engineering and design expertise.
Or massive investment in transport prior to 2012, so it’ll be ‘Bombay railways’ for a few weeks.
No cash limits on the NHS spending so it will carry on escalating at an un-supportable rate

Abell Morliss Chartered Accountants 128 Cannon Workshops, Cannon Drive, London E14 4AS
Regulated by the Institute of Chartered Accountants in England & Wales
regd. no. 3517869 regd. office:- Scope House, 18 Clarendon Road, South Woodford, London E18 2AW

These notes are subject to change in the light of errors being detected, or facts being found, on government websites ©MMIX Abell Morliss Limited.

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