The UK has delivered a Budget that unashamedly backs businesses, slashing the top rate of personal income tax and accelerating corporate tax cuts. Currently charged at 50% on all income over GBP150, 000, from April, 2013 the rate will drop to 45%.

The UK offers a competitive tax system through a reduction in the corporate tax rate. The government had originally intended to reduce the headline rate to 23% by 2014, but the Chancellor will now accelerate the process, and deepen the cut. At present, the rate stands at 26%, following a surprise 2% cut in last year’s Budget. Osborne has now repeated the 2% reduction, taking the rate to 24% instead of the 25% planned for April. Two further cuts are planned over the next two years, with the end result being a 22% corporate tax rate by 2014. This was a Budget focused heavily on tax changes. Also announced by Chancellor were:

• An increase in the bank levy to 0.105% from January 2013. This increase will help raise GBP2.5bn a year.

• The introduction of a limit on all uncapped income tax reliefs. For anyone seeking to claim more than GBP50, 000 of relief, a cap will be set at 25% of income (or GBP50, 000, whichever is greater).

• Changes to the value-added-tax (VAT) system designed to address its loopholes and anomalies.

• The introduction of an ‘above the line’ research and development (R&D) tax credit.

• The doubling of the Enterprise Management Incentive Scheme grant limit to GBP250, 000.

• The government will consult on the introduction of a general anti-avoidance rule (GAAR), and legislate for it in next year’s Finance Bill.