Here’s a summary of key changes introduced by the Finance Act 2010, formatted as requested:

Finance Act 2010: Key Changes

The Finance Act 2010 brought about several significant changes to the UK tax system, impacting individuals, businesses, and specific sectors. Here’s a breakdown of some of the most notable adjustments:

Income Tax

The Act introduced changes to income tax bands and allowances. While the basic personal allowance remained relatively stable, a key alteration involved the taxation of high earners. The Act effectively curtailed the personal allowance for individuals with adjusted net income exceeding £100,000. This curtailment meant that the personal allowance was reduced by £1 for every £2 of income above this threshold, leading to a higher effective tax rate for this income bracket. This measure aimed to increase tax revenue from higher-income individuals.

Capital Gains Tax (CGT)

A significant shift occurred in the Capital Gains Tax (CGT) rate. For higher rate taxpayers, the rate of CGT on most gains increased from 18% to 28%. This substantial increase aimed to bring CGT rates closer to income tax rates for higher earners, addressing perceived inequities in the tax system. There were exceptions for certain business assets, where Entrepreneurs’ Relief (now known as Business Asset Disposal Relief) continued to offer a lower rate.

Value Added Tax (VAT)

While the Finance Act 2010 itself didn’t directly change the standard VAT rate, it laid the groundwork for a future increase. The legislation signalled the government’s intention to raise the standard VAT rate from 17.5% to 20% in the following year (2011). This change, implemented subsequently, had broad implications for businesses and consumers across the UK, increasing the cost of goods and services subject to VAT.

Corporation Tax

The Act included provisions relating to Corporation Tax, focusing on areas such as controlled foreign companies (CFCs). The aim was to modernize and refine the existing CFC rules to prevent tax avoidance by multinational corporations shifting profits to lower-tax jurisdictions. The Act also introduced measures to improve the clarity and efficiency of the corporate tax system, although the more substantial reforms to Corporation Tax came in subsequent years.

Stamp Duty Land Tax (SDLT)

Changes were made to Stamp Duty Land Tax (SDLT) thresholds and rates, particularly affecting high-value properties. The aim was to generate more revenue from property transactions involving expensive homes. These adjustments impacted the overall cost of purchasing property, especially in high-value areas.

Other Notable Changes

The Finance Act 2010 also addressed various other areas, including:

Measures to tackle tax avoidance and evasion.
Changes to inheritance tax rules related to trusts and other specific circumstances.
Adjustments to excise duties on alcohol and tobacco.

In conclusion, the Finance Act 2010 represented a series of important changes to the UK tax landscape, particularly impacting high earners and businesses. It set the stage for further fiscal adjustments and reforms in the years that followed.