10 December 2009:
Jeremy Beckwith, Chief Investment Officer at Kleinwort Benson today gave his considered reaction to the Pre-Budget Report: "The Chancellor lived down to low expectations and delivered a PBR that proved to be something of a damp squib, containing little of economic or market significance apart from boiler makers and bingo halls. The GDP forecast of 3.5% from 2011/12 onwards looks highly optimistic from where we stand today - these forecasts are a key element in the expected improvement in the budget deficit in the years ahead. Deficits are forecast at more than £700 bn over the next five years, doubling the national debt."
Jeremy Croysdill, Head of Tax at Kleinwort Benson was surprised that the Capital Gains Tax rate was not increased, as was widely predicted. "We welcome the degree of certainty that this provides for our clients when planning and structuring their financial affairs", he said.
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This is the first time that the Government has restricted and rescinded the IHT threshold, and could be seen as a sign of things to come as it looks to find ways of raising additional tax revenues. Securing the nil rate band exemption through the use of a nil rate band trust, for example Kleinwort Benson’s Family Inheritance Trust, would guarantee the relief before any additional future amendments arise.
"The change in pension restrictions is another attack on the pensions industry and means many more people will be affected than originally expected; they will have to tread carefully when planning their financial arrangements to ensure that they do not fall foul of the anti-forestalling rules.
The confirmation of the withdrawal of the furnished holiday lettings reliefs will hamper the domestic vacation market, which over the past couple of years has been booming - mainly due to a weak pound. It offers a timely reminder of the beneficial tax planning opportunities that could be seized before 6 April 2010."
Jeremy Beckwith concluded: "Importantly, in political terms, very little specific detail of where the pain would be most felt was included in the PBR, other than the pay cap applicable to the whole of the public sector for two years from 2011. The other group to be targeted - which was widely expected and will score politically - is the levy on banker’s bonuses from yesterday onwards. Although this may well lead to lower bonuses this year, one suspects that the bigger investment banks that this measure is aimed at will find ways around an effective total tax take of 67%."
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For media enquiries and to speak with Jeremy Croysdill or Jeremy Beckwith:
Kleinwort Benson Rachel Butler +44 (0) 20 3207 7239
+44 (0) 7957 427066
Phoenix
Gordon Puckey
+44 (0) 20 7947 2856
Notes to Editors:
About Kleinwort Benson
Kleinwort Benson is one of the most historic names in UK banking with roots dating back to the 1850s. Kleinwort Benson is the brand name of Kleinwort Benson Private Bank Limited (established in 1962 from the merger of Kleinwort Sons & Co and Robert Benson & Co) and its subsidiaries.
It operates from principal offices in London and the Channel Islands with regional offices
in Birmingham, Cambridge, Edinburgh, Leeds Manchester, and Newbury.
Kleinwort Benson Private Bank Limited is authorised and regulated by the Financial Services Authority, registered number 119269 and is a member of the London Stock Exchange, APCIMS and the British Bankers Association. Kleinwort Benson Private Bank Limited is a company incorporated in England and Wales with company number 2056420 and VAT number 244733560. Registered Office 30 Gresham StreetLondonEC2V 7PG. Telephone +44 (0) 20 3207 7000. Telephone calls may be recorded.