UK Chancellor Alistair Darling today unveiled the 2009 Pre-Budget Report, in which he said new measures to tackle tax avoidance and evasion would be implemented, as well as a 50% tax on any bonus worth more than £25,000.
The Chancellor also announced a 200% penalty for those with offshore assets who fail to declare under the current New Disclosure Opportunity (NDO) once the deadline passes on January 4.
Darling said: "It’s fair that those who should pay tax don’t escape their responsibilities.
I am determined to tackle activities, such as avoidance and evasion, which undermine tax receipts.
"Since the Budget, HMRC has asked for details of at least 100,000 offshore accounts held at over 300 financial institutions.
"This Pre-Budget Report sets out anti-avoidance and smaller tax measures to deliver additional revenues, and protect £5bn a year of existing revenues.
"These are tough, but necessary, measures to increase tax." The details of these measures was not immediately available.
Concerning banks, Darling said he had decided against a tax on profits because it would damage their ability to rebuild their capital bases. However, as widely anticipated, bonuses have been targeted.
A one-off 50% tax on discretionary bonuses above £25,000 will be introduced, which Darling said would be imposed on the bank, rather than the employee receiving the bonus.
The Chancellor said: "[Banks] can use their profits to build up their capital base.
But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer."
He estimated this would raise some £550m.
It was also confirmed in the PBR that VAT will return to 17.5 per cent on January 1.
There was no mention of changes to the rate of capital gains tax, currently 18%, which surprised many commentators who thought raising CGT would have been a simple way of generating more revenue.
Neither was there any announcement on the introduction of a statutory definition of residence, which many industry figures had called for.
Louise Somerset, tax director for RBC Wealth Management, said: "It is disappointing that the Government has not taken the opportunity to announce the introduction of a statutory definition of residence, and clear up the current uncertainties. Based on HMRC’s guidance at the moment, simple things such as keeping your golf club membership after leaving the country can potentially mean you are still regarded as resident here."
