The Stage

Budget covers the usual suspects

Published Tuesday 23 March 2004 at 10:55

The beneficial loophole on declaring yourself a Limited Company is closed and the tax credit of 20% on new films is reinstated

Oh bliss! Oh joy! On March 17 it was Budget Day. A week later it is Quarter Day, so pay your rent. And a week thereafter it is the end of the tax year, so start completing your 2004 tax return. It is lucky that the Chancellor does not put a tax on hibernation. He has on everything else.

This article could have been written before the Budget since all the usual suspects are involved and the self-congratulatory pap for general consumption is repeated from last year. Can an election be far behind?

Notwithstanding, I am delighted to know that we have had the longest period of “sustained economic growth for 200 years”, although I doubt whether anyone is around to disprove this statistic. And, as usual, those hoping for a quiet smoke and a glass of wine will pay more for the privilege. But if you are over 70 years old you will have an extra £100 to do so, remembering of course that you will still have to pay your increased council tax. The cost of petrol will increase but not until September, by which time we will have forgotten about it. Clever!

A few years ago if you became a Limited Company you were able to get the first £10,000 profits Corporation Tax free. It has taken the Treasury by surprise that the formation of small companies mushroomed. What was originally called a tax advantage is now called a “loophole”. No surprise then that now this tax advantage has been rescinded. You will in future pay 19% on the first £10,000 paid out in dividends. Those clever boring pin-striped accountant boffins who advised you to incorporate have got their comeuppance.

So much for trying to plan ahead. One step forward, two steps back.

In addition, if your accountant comes up with another clever wheeze to save you tax, he/she has to eell the taxman in advance. So not only do accountants now have to report their suspicions regarding a client who may be money laundering but they have to own up to their own tax dodges. Presumably they will all become honorary members of MI5. It is also announced that the Treasury is proposing to borrow more than £37 billion. Try that on your local bank manager and see his/her reaction.

But it is not all doom and gloom and status quo. Having scrapped tax relief on new films yesterday, today he reinstates a tax credit of 20% so we can continue to look forward to films like Sex Lives of the Potato Men or any other vegetarian equivalent.

And indeed if you are one of the many single persons earning more than £200,000 per annum you will be £155 per annum better off or 42p per day. A Treasury has stated that it has ‘frozen’ (ie. not increased) corporation tax/stamp duty/capital gains tax/insurance premium tax/air passenger duty/betting levies and you can now die with the first £263,000 of your estate being untaxed. But if you are still living and your self-employed gross earnings exceed £58,000 you have to join the VAT club, the rate being frozen at 17.5%. Alternatively, if you are a church, your prayers have reaped the benefit in that you can now reclaim the VAT on repair and refurbishment at work. Someone up there listened!

And on the grounds that no one likes civil servants, especially the Inland Revenue, Customs & Excise and the Department of Works and Pensions, about 40,000 of them will lose their jobs. So that’s all right then.

But, wait, can it be that they were surplus to requirements in the first place? Surely not?