NASDA analyses emergency budget

The National Association of Specialist Dental Accountants (NASDA) has provided GDPUK with an analysis of the 2010 emergency budget. Chancellor George Osborne described his first Budget as ‘the unavoidable Budget’ in which spending cuts outweighed tax increases by a ratio of 77% spending cuts to 23% tax increases. For dental practices, the reduction in the Annual Investment Allowance and the increase in VAT are among the key changes.   Another key change is the increase in Capital Gains Tax (CGT) from 18% to 28% from the day of the budget, June 22nd. However, this is offset for dental practices by continuation of Entrepreneurs Relief at 10% although the lifetime limit has risen from £2m to £5m. On a personal level, gains on sale of quoted shares, second homes and other investment assets will be hit by the new higher tax rate, thus adding 10% to some tax bills. Meanwhile, large practices and corporate groups with profits over £300,000 will see tax rates reduce from 28% to 24% with a series of 1% reductions starting on 1 April 2011. Murray Walne, Chartered Accountant of Macintyre Hudson and a NASDA member said the standard rate of VAT is to rise from 17.5% to 20% with effect from January 4th 2011 and is expected to raise about £13 billion in extra revenue, the largest single revenue increase of all the provisions announced in the Budget. Other key changes he identified are: • The main rate of corporation tax will be reduced from 28 per cent in annual one per cent reductions over four years, starting next April. The small companies rate will be cut to 20 per cent from April 2011 • The income tax personal allowance will rise from April 2011 by £1000 to £7475 but higher rate tax payers will not benefit from this change • From April 2012, capital allowances on plant and machinery are to be scaled back from 20 per cent to 18 per cent a year and from 10 per cent to 8 per cent for life long assets. From the same date, the Annual Investment Allowance will be reduced from £1000,000 to £25,000 • On pensions tax relief, the government is reviewing the complex provisions that limit higher rate tax relief for people with high incomes from April 2011. They are considering introducing an annual allowance of between £30,000 and £45,000 • There are to be substantial changes to the tax credits system, reducing the numbers of people who can claim and the amount of tax credit to which they may be entitled To speak to a NASDA member in your area, go to the website at: www.nasda.org.uk