Overview

The Finance (No. 2) Act 2010 primarily amended tax rates and made several other provisions relating to pensions, MPs' expenses, and corporation tax. The act adjusted rates for corporation tax, capital gains tax, value added tax (VAT), and insurance premium tax, along with changes to how certain financial transactions are treated for tax purposes.

Description

This Act significantly altered several tax rates effective from January 4th, 2011. The main corporation tax rate was reduced to 27%. VAT increased from 17.5% to 20%, and insurance premium tax rates also rose (higher rate to 20%, standard rate to 6%). The Act also outlined changes to capital gains tax rates, with different rates applying based on income levels and the type of gain. It included provisions to repeal the high income excess relief charge and modified the treatment of individuals reaching the age of 75 in relation to pensions. The act also addressed expenses and allowances paid to MPs, and it amended the rules regarding corporation tax in the handling of amounts not fully recognised for accounting purposes, and specifically concerning insurance company business transfers involving excess assets.

Government Spending

The Act's impact on government spending isn't directly stated with figures, but the increased VAT and insurance premium tax rates would be expected to increase government revenue. The reduction in corporation tax could potentially decrease revenue in the long term. The changes to pensions and MPs' expenses may have budgetary implications but specific figures are not readily available within the provided text.

Groups Affected

• Businesses: Affected by changes in corporation tax, VAT, and insurance premium tax rates. The impact could be an increase or decrease depending on the specific nature of their operations.
• Individuals: Affected by changes in capital gains tax, income tax (MPs specifically), and insurance premium tax.
• Pensioners: Changes were made to pension rules for those reaching age 75 (shifted to 77).
• Members of Parliament: The Act clarified the tax treatment of their expenses and allowances.
• Insurance Companies: Changes were made to the tax treatment of business transfers involving excess assets.

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