This was trailed as a Budget that was expected to be low key and low on content, the Chancellor having to deal with the competing priorities of this being pre election, but with little room for giveaways. In that regard it did not disappoint.
Mr Darling painted a predictable picture of an economy that is less bad than expected as a result, of course, of the decisions taken by the Government.
Most of the measures in the Budget were either announced previously or leaked over recent days. The 50% income tax rate has been confirmed, together with restrictions on allowances and reliefs for the highly paid, as has the increase in National Insurance contributions. As expected, there is no change in the rates of capital gains tax and VAT, all as predicted in advance. He has also resisted the temptation to reduce corporation tax.
Banks featured heavily in his speech. This included the much better than anticipated receipts from the tax on bonuses, and the commitment to a worldwide tax or levy on the profits of the banks themselves. There is a mix of measures to help business, the less well off, first time house buyers, those looking to borrow or invest, new technologies, the young unemployed and, as would be expected in a Budget just before an election, the elderly. None of these measures have a significant impact here. There was bad news for cider drinkers, with more modest, yet higher than inflation, increases in tobacco and other alcohol duties. Again, as was expected, the previously anticipated increase in fuel duty will be staged. The House did at least wake up when the Chancellor announced the new tax information agreement with Belize, the home of the non UK domiciled chairman of the Conservative party. This was enjoyed by the Labour benches, even if that particular horse has already bolted. This, combined with a number of measures where the many would benefit at the expense of the few – stamp duty relief for first time home buyers funded by an increase in that on £1 million plus homes, care costs funded by the freezing of the IHT nil rated band – could leave you in no doubt that an election is imminent. But will we be affected by any of these measures in Jersey? Jersey residents do potentially pay UK IHT or death duty on UK assets, so the freezing of the nil rate band will affect a few. The increase in potential penalties for failing to pay tax to 200 per cent is aimed at those living in the UK with undeclared income offshore, but this should not be of major concern to us. This is part of a response to a consultation process which does acknowledge that changes in this area should not hurt the compliant majority, which is a positive outcome. Action is being taken to close specific loopholes and save £500m, but this does not include matters that would have a widespread impact here. There are changes to the taxation of dividends in the UK, which could in limited circumstances benefit UK groups with subsidiaries here. Hidden in the detail is confirmation of the previously announced increase in air passenger duty with effect from 1 November 2010. There are also VAT changes on the purchase of aircraft themselves. The proposed global bank tax could have a greater impact here, but this may be positive or negative. It does also require agreement to be reached across the globe, which is a considerable challenge in itself. The Conservatives have committed to unilateral action, which could affect the City of London and therefore the island. The Government is to take action from 6 April 2011 to address perceived avoidance through employee benefit trusts, which could affect some structures administered here. So overall a Budget that was predictable and well trailed, which contains few surprises. For us in the island this is to be welcomed at a time when we have enough challenges to deal with. No news has been good news.