Following a politically turbulent week, Chancellor Alistair Darling has presented his first Pre-Budget Report to the House of Commons.
While acknowledging recent uncertainty in the global markets, Mr Darling emphasised that the UK economy remained strong, and that the Government had met all of its fiscal rules. Notwithstanding this, the Chancellor revised economic growth forecasts for 2008 downwards, from 3% to 2-2.5%.
Key measures of interest to business owners included a series of reviews of the business taxation regime, aimed at simplifying the tax system for businesses and the self-employed, and proposals to allow local authorities in England to set a business rate supplement. The Chancellor also confirmed that the main rate of corporation tax will fall by 2%, to 28%, from next year.
The capital gains tax system will also be subject to reforms, with the introduction of a single rate of 18%, with the stated aim of ensuring that private equity bosses pay a 'fair share'; while a number of 'loopholes' for non-domiciled taxpayers will also be examined.
The Chancellor made a much-anticipated announcement on inheritance tax, revealing that the potential threshold for married couples, civil partners, widows and widowers, will increase to £600,000, rising to £700,000 by 2010.
Other significant announcements include the introduction of a new aviation
tax in 2009, which will tax individual flights rather than passengers, and
increased investment in health and education, transport, and science and technology.