Smoke and mirrors?

A smoke and mirrors effect can be found when it comes to higher-rate taxpayers, with many senior professional staff in practices excited by the prospect of a reduction in the basic rate of income tax, while not seeing any significant benefit in their paypacket.

Employed staff earning over £38,000pa will see very little benefit. What they gain by a 2p basic rate income tax reduction, they lose on both the scrapping of the 10 per cent band and the raising of the income levels at which the main national insurance liability is charged.

Business taxation

The biggest budget headline grabber was the cut in the main rate of corporation tax from 30 per cent to a new rate of 28 per cent with effect from April 1, 2008. But before we celebrate a reduction to our annual tax bill, hands up if your profits are in excess of the £1.5m required to qualify for a tax reduction.