Pre-Budget Statement - Taxation issues

Capital gains tax
Before the Chancellor made his Pre-Budget Statement, there was speculation in the newspapers that he would increase capital gains tax from 18% to 25%. In the event, no such announcement was made. It is possible that an increase could still be announced in the Spring Budget, to take effect from 6 April 2010 (or even from Budget Day itself), so - all other things being equal, which of course they never are - there may be an argument for making any substantial planned disposals before the Budget.

Inheritance tax
The Chancellor announced that the inheritance tax threshold, which was to have increased to £350,000 from 6 April 2010, will now be frozen at £325,000.

Temporary workers
There is likely to be a tightening of the rules which allow some employees, whose working pattern is to have a series of temporary jobs found through an employment agency, to maximise their tax relief for travel and subsistence expenses by being continuously employed by the agency's 'umbrella company' which hires them out to client firms. It is not yet clear however, exactly what is proposed.

Business taxation
Firstly, there was no announcement about 'income splitting' and so it appears that the current tax r‚gime for husband-and-wife companies will continue, at least for 2010/11.
Secondly, the Chancellor announced that the planned 1% rise in the small companies' rate of corporation tax (from 21% to 22%) will be deferred until 1 April 2011.
He also confirmed that the temporary 40% first-year allowance for expenditure on machinery and vehicles (other than cars) will, as previously announced, expire on 31 March 2010 for companies and 5 April 2010 for unincorporated businesses. This will not affect the availability of the 100% Annual Investment Allowance for expenditure up to £50,000, though it should be noted that the Conservatives have said that they will abolish this allowance if they win the General Election.
Finally, the Chancellor proposed a 100% first-year allowance for electric vans bought new (not second-hand) on or after 6 April 2010 (1 April 2010 for companies). This proposal is subject to European Commission approval under EU competition law.