2010 Budget – Key Tourism Points
General Bits
· VAT to rise to 20% on 4 January 2011
(this will have a significant impact on the UK’s competitiveness on compared to other major European destinations that have reduced rates for tourism related products and services)
· Unprotected Government Departments (eg DCMS) will see their budgets reduced by an average of 25% over the next four years. (this will pose a considerable threat to central Government funding for tourism)
· The results of the Comprehensive Spending Review will be announced on 20 October 2010
· Corporation Tax will decrease by one percent per annum over the next 4 years to 24% in 2014
· Small Business Corporation tax will be reduced from 21% to 20% in 2011
· CGT will apply at 28% from midnight for people on higher tax rates
· Entrepreneurs’ relief on CGT will be extended to £5m
· New Businesses established outside London and the SE will gain NI benefits of £5k
· A Regional Growth Fund for capital projects will be established
· £11bn worth of social benefits are being cut
· From April 2012 capital allowances on plant and machinery will be reduced from 20 per cent to 18 per cent, and the Annual Investment Allowance will be reduced from £100,000 to £25,000
· Two year pay freeze for public sector employees except those earning under £21k
Tourism Specific Issues
FHL Rules
The proposal inherited by the Government to repeal the special tax rules for furnished holiday lettings will not be implemented. Instead, the Government will consult over the summer on a proposal to ensure the tax rules meet EU legal requirements in a fiscally responsible way, by changing the eligibility thresholds and restricting the use of loss relief. Any changes will take effect from April 2011, and in the meantime the current rules continue to apply for the 2010-11 tax year. (18)
RDAs
The Government will enable locally-elected leaders, working with business, to lead local economic development. As part of this change, Regional Development Agencies will be abolished through the Public Bodies Bill. A White Paper later in the summer will set out details of these proposals. As part of this, the Government will:
• support the creation of strong local enterprise partnerships, particularly those based around England’s major cities and other natural economic areas, to enable improved coordination of public and private investment in transport, housing, skills, regeneration and other areas of economic development;
• consider the most appropriate framework of incentives for local authorities to support growth, including exploring options for business rate and council tax incentives, which would allow local authorities to reinvest the benefits of growth into local communities; and
• as part of the shift to a more locally driven planning regime, promote the role for a simplified planning consents process in specific areas where there is potential or need for business growth, through use of Local Development Orders.
Rural Fuel
Reflecting the Coalition commitment to investigate measures to help with fuel costs in remote rural areas, the Government is considering the case for introducing a fuel duty discount in remote rural areas. This includes possible pilot schemes in Scotland.
APD
The Government will explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty, which could encourage fuller planes. Major changes will be subject to public consultation.
Better Regulation
Regulation previously scheduled for introduction over the coming year will not be introduced unless it has been reviewed and re-agreed by the Reducing Regulation Committee. Sunset clauses will be applied to new regulation so they end after seven years unless Parliament has confirmed they are still necessary. Budget announces that departments will immediately start to review employment law as committed to in the coalition agreement. The Government will influence the EU to adopt its new approach.
Alcohol Duty
The Government will continue with the plans it inherited to increase alcohol duty rates by two per cent above inflation each year to 2014-15.
