I have had a look at the 216 page pre-Budget report from the Chancellor today. This will certainly help me sleep tonight.

In short, there is little that we did not know, or more accurately expect. I am of the view that whatever one’s political persuasion, the announcements made today may never come into effect with a change of Government. It is very difficult to remove the political manoeuvring from the detail with much success.

The key points that will impact our clients are as follows:

· The personal allowance is frozen at £6,475 however from April 6th 2010 those with a taxable income over £100,000 will see the personal allowance reduce by £1 for every £2 over £100,000. In other words once your income is £112,950 you will lose your personal allowance entirely. Remember the personal allowance is the amount of income that can be earned before you pay any income tax1.

· Those earning £130,000 or more will have a pension contribution restriction of £20,000 which includes all payment from both employees and employers. This comes into effect from April 2011 but the Government announced2.

· Those earning over £150,000 have the same restriction but also pay income tax at 50%

· VAT will return to 17.5% from 1st January 20103. Our invoice for services which is issued before 31st December will be charged at the current rate of 15%. We agree a monthly payment facility with our clients to pay this over 12 months. So even though VAT will rise this will not apply to anyone invoiced before 1st January 2010.

· Public sector workers (doctors) will be expected to pay more into their employers pension scheme (no detail was provided)4.

· National Insurance contributions will rise by 0.5% for employees, self employed and employers from April 20115.

· 50% tax on bonuses over £25,000 to bank employees6.

· The inheritance tax nil rate band is frozen at £325,000 until 20117.

· ISAs have a £10,200 allowance for all (not just the over 50’s) from April 6th 20108.

· Public sector pay awards are likely to be restricted to up to 1% a year from 2011 to 20139.

Tomorrow I will provide a guide to the Budget which I hope you will find of use.

1: Section 5.4, p74 & B5, p175

2: Section 5.28 & 5.49

3: Section 5.20, p74

4: Section 6.51, p113 & Annex B82 p196

5: Section 5.20, p74

6: Section 3.38, p50

7: Section 5.92, p94

8: Section 5.38, p83

9: Section 6.49, p112