UK - The wealth struggle continues on Banking Profits

News 18 10 2009: Darling 'tax grab' on bank profits.

The Sunday Telegraph said proposals, including a windfall tax on profits, were being drawn up in <?xml:namespace prefix = st1 />Whitehall amid mounting anger over the prospect of a return to big City bonuses. The conservatives accused the Government of "playing catch up" while their Mr Osborne said: "We're all in this together - and that includes the banks. Struggling British families would find it grossly unfair if the banks avoided paying their fair share to help fix Labour's debt crisis."

 

As the rich get richer and the poor get poorer, in a Nation whose systems (standards) are heading towards a state of disrepair, the Political Parties toil at the taxpayers expense in apportioning blame – this parallel to their own anger in facing an enquiry over their Expense dealings. Is it not a question of the pot calling the kettle black when a 1993 Conservative Government (under N Lamont) cut Tax Credits depreciating Pension Funds while in 1997 a Labour Government (under Chancellor G Brown) removed such growth altogether which has resulted in Pension funds being inadequate in meeting the demands made of them?. How ODD that on one hand the Government announce that people are living longer while on the other hand the reality is that Pensioners can little afford to survive!. If the TOP (High Salaries/Bonus culture) continue not to recognize their “foundations” then given time the naturalness of gravity will take effect forcing an exchange from a lifestyle based upon fantasy to that of reality as to ordinary people.

 

OLD News:

00 00 1949 Labour – Profits Tax introduced. The standard rate of income tax was 50%. A company making £1,000 in profits would pay £500 in tax. If the company chose to pay a £100 dividend, the recipient would be treated as if he had earned £200 and had paid £100 in income tax on it. In addition to income tax, companies were also subject to a profits tax introduced by Labour Chancellor Sir Stafford Cripps, which was deducted from company profits when determining the income tax liability. It was hoped that companies would retain profits for investment, which was considered a priority after the Second World War but the tax did not have the desired effect and so increases were introduced in the rates of the distributed profits tax by the post-war Labour government, in an attempt to coerce companies into retaining more of their profits.

00 00 1951: Conservative Budget: At this time the profits tax was 50% for distributed profits and 10% for undistributed profits. A series of reductions in the profits tax were brought in from 1951 onwards by the new Conservative government. The tax rates fell to 22.5% on distributed profits and 2.5% on undistributed profits by 1957, although the profits tax was no longer income tax-deductible.

00 00 1958: Conservative Budget : Chancellor Derick Heathcoat-Amory (1958-1960) replaced the differential profits tax with a single profits tax measure reflecting the differences between the Conservative and Labour parties: the Conservative approach was to distribute profits to capital holders for investment elsewhere, while Labour sought to force companies to retain profits for reinvestment in the company in the hope this would benefit the company's workforce.

Prior to 1965: Capital gains were not taxed before this date. Companies were subject to income tax on their profits at the same rate as was levied on individuals. An imputation system existed, whereby the income tax paid by a company was offset against the income tax liability of a shareholder who received dividends from the company.

01 04 1965: Labour Jim Callaghan ( Chancellor of the Exchequer (1964 – 1967)). Corporation Tax enactment -effect of the tax was to revert to the distribution tax in operation from 1949 to 1959: The classical system (similar to that used in the US) used prior was were Companies and individuals paid the same income tax, with an additional profits tax levied on companies. The Finance Act 1965 also introduced capital gains tax, at a rate of 30%.

00 00 1973: Conservative under Edward Heath. First Major changes to Corporation Tax under which an individual/Company receiving a dividend became entitled to an income tax credit (enacted in 1975 by the US) representing the corporation tax already paid (ACT) by the company paying the dividend.

00 00 1988: Conservative under M Thatcher. Income and Corporation Taxes Act 1988.

00 00 1993: Conservative Budget ( N Lamont Chancellor of the Exchequer, 1990-1993 ). Cut the ACT rate and tax credit to 22.5%. The change had big effects on Pensions and non-taxpayers. Example(X) - A pension fund receiving a £1.2 m dividend income prior to the change would have been able to reclaim some £400,000 in tax, giving a total income of some £1.6 m but after the change only some £300,000 be reclaimable, reducing income to some £1.5 m, a fall of some 6.25%.

00 00 1994: Conservative Budget of Norman Lamont - ACT rate and tax credit cut to 20%

00 00 1997: Labour Budget – under Gordon Brown. The ability of pension funds and other tax-exempt companies to reclaim tax credits was abolished immediately [ including individuals from 1999]. In respect to Example(X) above the loss of the £300,000 reclaimable in tax credit meant that a the Pension fund would fall to some £1.2 m [ a fall in income of some 20%]!. Member of Parliament for Labour Frank Field described it as a "hammer blow" while the Sunday Times describing it as a swindle. This stealth tax rise has been blamed for the poor state of British pension provision.

00 00 1999: Labour Budget – under Gordon Brown. Introduced the quarterly instalment régime. THIS ENDED the ability of individuals to reclaim tax credits. The classical system reintroduced abolishing advance corporation tax and of repayable dividend tax credits. Tax competition between jurisdictions has reduced the main rate to 30%, and the main rate is planned to reduce to 28% from April 2008.

00 04 2008: Corporation tax planned was planned to reduce to 28% by this date. Corporation Tax Rates 2008/9. Here are the Corporation Tax rates for the 2008/9 tax year.

£ per year (unless stated) - £0-£300,000 - 20%[2007-08] / 21%[2008-09]

£ per year (unless stated) - £300,001 - £1,500,000 – Marginal relief [2007-09]

£ per year (unless stated) - £1,500,001 or more - 30%[2007-08] / 28[2008-09]

 

Undefined?.

The tax system in the United Kingdom holds "capital" and "revenue" as distinct forms of income and expenditure. Neither term is formally defined; capital implies financial items that will have an enduring benefit, while revenue implies an ongoing or recurrent item, relating to something likely to be used for short period.