A.W.BECKINSALE & CO.

SUMMER BUDGET 1997

The first Labour Budget since the 1970's has been awaited with a mixture of anticipation and apprehension. On the one hand, there were promises not to increase personal tax rates.  On the other hand, there were dire warnings about the state of the nation's finances, and a general conviction that a Labour Chancellor must increase taxation. It was only a question of how much, and how exactly, would he increase it.

Over the weeks since the Election, so many different possibilities have been suggested in the Press that it became difficult to take sensible planning measures - surely the Chancellor could not intend to do all these horrible things, but which half would he do?   There were the hints that this was a 'softening-up exercise' - that we would be relieved if he only put some of the increases into effect. The Stock Market seemed to believe this on Tuesday, rising sharply on the rumour that it would not be as bad as expected.

In the event, the increases for the individual were mild - a cut in MIRAS rather than abolition, no change to relief for pension contributions.
WARNING STEALTH TAX ALERT The biggest tax increase - denial of tax credits to pension funds - is less visible, but will nevertheless have a significant long term effect.

Mr Brown delivered a wide range of changes, mainly effecting businesses, in a packed but steady 60 minutes. He promised to return in the spring - with his attention turned particularly on Capital Gains Tax.

SIGNIFICANT POINTS

• No change to rates or allowances for personal taxation
• MIRAS cut from 15% to 10% from 6 April 1998
• Abolition of repayable tax credits on dividends for pension funds
• Corporation tax rates cut by 2% from 1 April 1997
• 50% first year allowance on new equipment bought in the next year
• Windfall tax on some privatised, regulated companies

AUTHORISED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS IN ENGLAND AND WALES TO CARRY ON INVESTMENT BUSINESS