Clegg and Cameron Deal on Tax

As is reported in the press this morning the Lib Dems seem to have the upper hand when it comes to securing their tax aims.

Look out for Budget # 2, but these are some of the points I've culled from the papers today:

• The Lib-Dem's headline reform of increasing the lower tax threshold to £10k will be introduced.
• The rate of capital gains tax (CGT) on the disposal of non-business assets will increase. We will therefore have two rates. It remains to be seen how this will operate in practice but we are likely to see the rates of tax for income and capital being matched – with the top rate of CGT at 40 or 50 per cent. People thinking of making taxable disposals (in particular making gifts and settling trusts) should seriously consider accelerating these.
• There will be a lower rate of CGT, or an exemption (a la business assets taper or entreprenuers' relief) for entrepreneurial assets. This is unlikely to cover shares other than in your own business (which could mean 5% ownership – but this remains to be seen).
• A reversal of the increase in the threshold for national insurance contributions made by employees.
• The tax break for married couples will go ahead, but it is not likely to be big enough to cover the cost of the engagement ring (or even the mangagement ring). The Lib-Dems have not agreed to support this but they've agreed not to block it.
• Plans to increase the inheritance tax threshold to £1m are deferred indefinately.

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