The 2007 Pre-Budget report outlined various plans for current issues that will have a large impact on a lot of people’s lives and finances.
Inheritance Tax reform took centre stage in the report, with the Government proposing to ensure that all married couples and civil partners get double the standard tax allowance, raising to £600,000 immediately and going up to £700,000 by 2010-11, including full spouse relief.
Mr Caldwell, Director at Fair Investment Company, said of this is that “On first glance, the new inheritance tax rules may appear reasonable, and any increase is better than none. But you can’t help but think that this is simply a knee jerk reaction. Labour has had ten years to change the rules on IHT, and it has taken a Conservative proposal at their conference in Blackpool for them to address the issue,” he said.
Of the Government’s proposal to reform Capital Gains Tax so that a single rate of 18 per cent will apply to all from 2008-09, he said: “There is no doubt that CGT will be simpler,” he said. “However, in this case, simpler means costlier. The government should be encouraging UK businesses and investment if its target is economic growth.”
In light of the flash floods this summer, the report also highlights plans to increase flood and coastal erosion risk management funding from £600 million in 2007-08 to £800 million in 2010-11. However, according to the Association of British Insurers, this does not take into account the spending required to address the main issue of drainage which was highlighted this summer and will fall short of the necessary funds.
As a result of this, insurers have warned they might not be able to provide cover in flood-prone areas of the UK unless the Government commits more funding to the provision of flood defences.
While Mr Caldwell sympathises with the insurance companies that are currently operating at a loss, “it’s the UK householder who is picking up the bill for the government’s inadequate flood prevention measures,” he said.
“We wait with interest to see the results of the ABI’s forthcoming review of its Statement of Principles on the Provision of Flood Insurance. The fact is this issue is not going to go away and both the Government and the insurance firms have a responsibility to ensure that the public are protected.”
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