On 22 June, the Chancellor of the new Coalition Government, George Osborne, is set to deliver the Emergency Budget.

Whilst it is of course impossible to predict exactly what measures will be introduced to tackle the UK's record £163bn deficit, you may be able to minimise exposure by planning in advance.

CGT

It appears as though a significant increase in capital gains tax ("CGT") rates (possibly up to as much as 50% from 18%) is a virtual certainty. It is also highly likely that the CGT annual exemption of £10,100 will be radically reduced.

However, given the UK's continued need for ongoing investment, it is unlikely that the Coalition will do away with the existing entrepreneurs CGT relief, although, whether this relief will continue at its current rate (i.e. tax at 10% for the first £2m of capital gains) is anyone's guess.

Corporation Tax

Whilst corporation tax rates are likely to be lowered from 28% to 25%, this relaxation is likely to be funded on the back of increased restrictions to various tax reliefs such as R&D relief and an abolition of the 100% capital allowances currently in existence.

However, given the Chancellor's recent comments that the Coalition "will reform the corporate tax system", it is unlikely that these will be the only changes to the corporation tax system introduced during the Coalition's tenure in government and indeed a complete overhaul over the next five years is a distinct possibility.

VAT

A rise in VAT to around 20% is on the cards.

Personal Tax Allowance

Married couples should be aware that although there is likely to be a small additional personal allowance for being married, the Coalition is likely to tighten up the taxation of intra-spouse transfers. It is anticipated that income shifting rules will be introduced to ensure that those subject to the highest rate of income tax are unable to avoid their high tax liability by transferring funds to their spouses who are subject to a lower rate of tax.

Highest Impact

Although the impact of these changes is likely to be widespread, it is undoubtedly going to be felt most acutely by companies, trusts, charities and those in the highest personal tax bracket.

Despite the undoubted severity of some of these likely changes, all hope need not be lost as various actions may still be available to reduce exposure. To find out more about what can be done or to discuss the above in greater detail please contact Glen Atchison or David Scott of Harbottle & Lewis' Tax Practice.