the Budget provided clear evidence yet again that the Government ‘gets it’. The only way to pay for the public services we want is to encourage strong growth in the private sector and take the case for UK plc out to world markets.
The Chancellor proposed tax changes to encourage non-doms to invest their offshore income and gains into UK business without triggering a UK tax charge and a statutory residence test to give more certainty to people coming to the UK. Also he announced that there would be no more changes to their tax system for the rest of this parliament. Amending badly drafted and frankly daft tax legislation which harmed investment into the UK and rectifying the uncertainty on residency are important investment generating measures which put us on the right footing.
The increase in the remittance basis election charge to £50,000 for people staying in the UK for 12 years ensures that those coming to the UK for the medium term are not hit further and those that stay longer are rightly paying a higher contribution for living in the UK for a substantial period.
The proposed changes to national insurance to bring into line with the income tax regime, though difficult, will also be a major simplification of our tax system which will be welcomed by most.
Corporate tax reduction
The 2% reduction in corporation tax in this budget are a boost to the UK in attracting companies to locate to UK plc rather than our competitor jurisdictions.
The main rate of corporation tax will reduce from 28% to 26% from April 2011. The rate will then be reduced by a further 1% in each of the following three years, and as a result will be 23% by 2014. This, together with proposed welcome changes to the CFC rules, are aimed to promote higher levels of business investment and help the UK maintain the lowest rate in the G7.
And in a clever move, to offset the benefits to banks from the further cut in corporation tax, the rate of Bank Levy will increase to 0.078% from 1 January 2012.