The PBR Highlights

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Executive summary

A massively missed opportunity. The last thing we should expect from a Labour Chancellor. A political mistake - an admission that the Tories are indeed setting the agenda, and entirely for the benefit of their natural supporters.

Inheritance Tax

The one clever move in the PBR was to allow couples to use each others allowances. It kills the market in tax planning in this area and stops the accusation that only the rich can afford to avoid this tax. But it will cause harm. There will be less wealth redistribution. The housing market will continue to grow as less tax will be charged on house price increases. Overall, a mistake. He could have created partially transferable allowances quite fairly. And the rules on this will be complex - you can be sure.


The plus - he did something. It is now recognised that there is a problem. The other plus - he's left the mega-wealthy as the abusers which makes it even easier to attack the injustice of this in the future. Otherwise, a complete lost opportunity to end an abuse, to raise money to tackle child poverty and to bring the UK into line with the rest of the world.

The issue will not go away. Expect an attack from Europe now. It is very obvious now that the UK is operating a harmful tax practice.

Overall, a massive disappointment and a political complete own-goal. It will backfire.

Capital gains tax

The biggest mistake in the whole budget. I'd called for a 20% rate of tax instead of the 10% one - but the 18% rate on all gains creates massive tax planning opportunities for accountants - so watch the abuses rise - and creates an incentive for people to speculate and not create wealth. In economic, accounting and political terms a straightforward disaster. And it does not nothing to tackle private equity.

Private equity

Because the non-dom rule stays for the wealthy and because the income of private equity partners is still going to be taxed as capital gains the reality is that he has done nothing of any consequence at all to tackle this abuse. So much for the Prime Minister's words saying the loop hole would be shut. He clearly cannot identify a loophole, and that after ten years at the Treasury.

Small business

As predicted, the abuse of paying dividends without underlying economic substance in this sector is to go. I have written on this already, here. Expect a massive backlash from the small business sector, but reform here is required. The trouble is, on this track record, he'll bodge it by ducking the real issues.


There had been a call for these to be merged. They won't be. At an admin level this is an opportunity lost. The protection of pensioners could have been managed.

Overseas aid

At last - some good news. But please spend it wisely - and it must not be linked to UK exports.

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