How was it for you Darling?

Tony Harris writes - Alistair Darling announced a last minute delay in the clampdown on income sharing, with proposals now put off until 2009 to allow for further consultation. Contractors working via one-man ltd companies have routinely and legitimately split dividends with their Spouse to utilise two sets of nil and basic rate income tax bands but since the Artic Systems case this area of tax planning had seemed close to being abolished. Contractors will breathe a sigh of relief at the news this morning and industry bodies such as the Professional Contractors Group (PCG) will have more opportunity to continue their fight against any change from the current rules (we urge those potentially affected to join the PCG via a link on www.contractorfinancials.com).

Umbrella companies face further scrutiny as HMRC fired further shots across the bows of firms that seek to push the boundaries of what can reasonably be offset as expense and travel costs. Rather than sleep walk into problems with the authorities it seems that many more Contractors will switch from the more exotic and therefore more risky Umbrellas to more standard PAYE payroll firms. Any financial loss as a result of giving up the increasingly tenuous dispensations could be compensated by a good nights sleep without fear of the taxman.

Otherwise it was a pretty dull budget for the general population.

Headlines: forecasts for economic growth for this year cut by 0.25% - to between 1.75% and 2.25% putting more pressure on expected tax receipts with Government borrowing up to £43bn 2008/9.

• Child Benefit will rise from April 2009 to £20 week - a year earlier than planned
• Non Doms will now have to pay £30,000 pa
• Cigarettes up 11p from yesterday
• No Stamp Duty for shared ownership property purchases if below 80% personal ownership
• 6% above inflation tax rise on booze. (4p a pint, 14p bottle of wine, spirits 55p, cider 3p a pint)
• 70,000 new homes planned with sites already identified
• Steps to encourage long term fixed rate mortgages
• Key workers such as teachers and nurses can access shared ownership money
• Winter fuel allowances up for the over 60's from £200 - £250 over 80's £300 - £400
• Small Business capital gains tax 10% for the first £1million gain
• Initial Tax disc levies for gas guzzlers of up to £950 in 2010
• No increase in fuel tax for now but 2p rise due in 6 mths

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