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Budget Watch : Taxation

While there are many things which may or may not happen over the next two years, one thing which is inevitable is a significant increase in both business and personal taxes. Even though the UK authorities may well need to wait until 2011 or 2012 to instigate their "smash and grab" to help repay the ever growing national debt, it seems that big earners across the UK will be hit very hard.

The authorities have already revealed that those earning in excess of £100,000 a year will have their personal allowances reduced from 2011 and those earning in excess of £150,000 a year will be hit by a new 45% tax band. The idea is to hit the high earners to cover government expenditure over the last 18 months and possibly for the next 18 months without impacting upon low-income families and low-income individuals.

However, with a 0.5% increase in National Insurance Contributions on the way and speculation about a possible increase in the basic rate of VAT to 18.5% it seems the next few years could be very difficult for the UK population and the UK business arena. There are even some people suggesting that UK VAT may rise to 20% and this could be announced at the same time as significant public sector spending cuts for the future. However, all of the above information will change if as expected we see a Tory government move into power in 2010.

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