10 December 2009 – In a highly political PBR, Alistair Darling had to concede that the recession in the UK had been worse than anticipated. Nevertheless, he avoided giving details of where the cuts in public spending which everyone knows are inevitable post the General Election are likely to be made.
‘No material changes in corporation tax were announced, the main additional tax burden falling on individuals through an increase of 0.5% in national insurance contributions in addition to the 0.5% already announced with effect from April 2011. Neither has there been any change in the rate of capital gains tax, leaving a huge difference between that rate and the top rate of income tax. It remains to be seen whether this will be reviewed at the time of the Budget.
As anticipated, a tax is to be levied on bankers’ bonuses. This will take the form of a one off charge on banks and other financial businesses equal to 50% of any bonuses in excess of £25,000 awarded to individual banking employees between today and 5 April 2010 except to the extent that there was a pre-existing contractual obligation to pay such bonuses.
The employees’ tax position is unaffected by the levy, which will not be tax deductible in calculating the profits of the paying company.
The Chancellor also referred to protecting £5 billion per year through anti-avoidance and evasion measures although how this figure is calculated remains unclear.