[Continued from Emergency Budget 2010: Key Tax Provisions (Part 1)]
Inheritance tax (IHT)
The IHT threshold (the level at which you'll need to pay tax) remains frozen at £325,000 until 2014. So while the Liberals compromised on VAT, the Conservatives compromised on IHT, as they promised to increase the threshold to £1m in their election manifesto.
Capital gains tax (CGT)
The Liberals wanted an increase in the main CGT rate from 18% to 40%. What they got was a mere 10% increase to 28%. The standard rate will remain at 18%. Moreover, the entrepreneurs' lifetime relief rate will remain at 10% and will be extended from the first £2 million to the first £5 million of gains made over a lifetime.
The main rate of corporation tax (payable on profits of £1,500,001 or more) will fall from 28% to 27% in 2011-12, with further reductions to 26% in 2012-13, 25% in 2013-14 and 24% in 2014-15. Thus, taxes for UK big business will soon be the lowest in the G7 and fifth lowest in the G20 -- for how long, however, remains to be seen.
The small profits rate of corporation tax (payable on profits between £0-300,000) will also fall from 21% to 20% in April 2011.
A bank levy based on banks' balance sheets will be introduced effective 1 January 2011. It is proposed that the levy will be set at a rate of 0.07%, with a lower initial rate of 0.04% in 2011. The exact rates will be confirmed later this year.
Alcohol and tobacco duties
With a nod to the Liberal Democrats' traditional supporters in the west country, the coalition has scrapped the 10% increase in cider duty announced in April. All other alcohol and tobacco duties will remain the same.
The 50p landline duty scheduled due to come into effect in October (to fund investment in next-generation broadband) has been scrapped.
** Additional Information and Advice **
Depending on your circumstances, however, it may be a good idea to speak with a solicitor who specialises in tax law. You can find a solicitor in your area for free via solicitor matching services, which can also help you to understand the best course of action for your situation and whether you are even ready to hire a solicitor.