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The Budget will be read on 22 April 2009, 16 days after the start of the tax year. How awkward, how inconvenient.

But why so late? The cynical amongst us might wonder at its being scheduled two days after Barack Obama's expected visit to Britain. Surely Labour is not hoping for some Obama-shine to rub off on them, and distract us all from the contents of the Budget two days later? Surely not.

The Finance Act 2008 received Royal Assent on 21 July 2008.

As far as complicated legislation goes, this Act takes some beating. Over 400 pages, packed with amendments, repeals, etc. Normally, such an Act would have a Schedule at the end, setting out all the legislation repealed by that Act. This time, the draftsmen did not even bother. So, for the first time that I can recall, the Finance Act does not include a Repeals Schedule. It is therefore impossible to tell, at a glance, what legislation has been repealed by the Act. Frankly astonishing. Even in view of its well-deserved reputation for sloppy and incompetent drafting, this Government has somehow managed to surpass itself.

Protests are mounting over the abolition of the 10% rate. Even Government ministers and high-ranking Labour Party members are joining in the criticism of the Government.

Gordon Brown will probably calculate that it would be too embarrassing to do a U-turn and keep the 10% rate after all. Even so, he will probably feel he has to do something to give the impression that he cares about the lowest earners and pensioners who will be most affected by this measure. This is my prediction: the announcement of a benefits package "providing targeted help to the most vulnerable in society". Therefore, more tax credits. In other words, more form-filling, more bureaucracy, more complexity, more waste.

It would be easier simply to raise the tax-free allowance to, say, £10,000, thereby ensuring that the lowest earners get to keep most of their income. However, don't hold your breath.

The 2008-09 tax year begins today, with loud cries of protest over the abolition of the 10% tax rate ringing in the Government's ears. Technically speaking, the 10 tax rate still exists, but only for "savings income", i.e. interest and similar income. Employment and pension income will be taxed, initially at 20%, and then at 40%.

The basic rate is reduced from 22% to 20%, however, this is small comfort to the lower earners who will be hit hard by the loss of the 10% rate.

Will the Government change its mind, and keep the 10% rate after all? Not such a far-fetched idea; this is, after all, a Government whose tax policy consists of blunders and U-turns. The Finance Bill is currently going through Parliament, so until it receives Royal Assent in mid-July, anything is possible.

The Finance Bill was published last Thursday - all 443 pages of it. I had a brief, crazy idea to print out the Explanatory Notes, but quickly gave up the idea on seeing that they ran to 1148 pages!

So much for simplification.

The Bill and Explanatory Notes can be downloaded here. (Very large pdfs - you have been warned)

Given the outcry about the proposed changes to capital gains tax taper relief, don't be surprised if the Government performs a U-turn in next year's Budget.

Here are my predictions:

1. They may decide to 'phase in' the abolition of the relief, in order to take some of the sting away. Maybe by tinkering with the rates somewhat. You can trust this Government to make things more complicated than they need to be.
2. They may decide to exclude certain assets from the 18 per cent rate. I'm thinking of things that would currently qualify as 'non-business assets' under the taper relief rules. Things like second homes, shares held for investment purposes, etc. They may decide that these should continue to be taxed at their current (higher) rates.
3. Instead of (2) above, they may create a 'special exemption' from the 18 per cent rate for assets that currently qualify as 'business assets' for taper relief purposes. Those can continue to be taxed at the current effective rate for higher rate taxpayers of 10 per cent. There will, of course, be stringent conditions to be met before an asset can take advantage of the special exemption.
4. Or they can just quietly shelve the whole abolition of taper relief thing, and pretend it never happened. This should be the easiest way out. Of course there would be taunting and jeering from the Opposition benches, but if the Government is brave enough to weather that (which I doubt), then this would be the best thing all round for everybody. Don't bank on it, though.

I mentioned earlier that I would be taking another look at today's announcement on inheritance tax, to see how it might work in practice. I have looked into it a bit more, and can report that the tax benefits purported to be conveyed by this relief, are already available, without the need for today's announcement. It is currently possible for spouses and civil partners to draw up their wills using nil band discretionary trusts to achieve exactly what Alistair Darling has so generously given us today. So a little bit of tax planning from a high street practitioner would achieve the same result. People who are worried about inheritance tax would have taken these steps, anyway, as one would assume that their lawyer would have advised them to draw up appropriate wills. Therefore, all that Darling would have saved them by today's announcement, is the lawyer's bill - approximately £1,000.

I mentioned in yesterday's post that, in typical Gordon Brown style, any inheritance tax relief would be 'stingy, complex and extremely difficult and wasteful to administer'.

Stingy: check.
Complex: let's wait and see the paperwork claimants have to fill.
Extremely difficult and wasteful to administer: it shouldn't be too hard to administer this tax allowance, but I will wait until I see the paperwork before I give my conclusion. This, remember, is a Government that never does things the simple way.

Inheritance tax - transferability of allowances between spouses and civil partners.
A cunning move to unsettle the Tories, but let us see how this tax break works in practice.

Capital gains tax - abolition of taper relief.
Yes, you heard correctly. Taper relief, which was introduced by Gordon Brown in 1998 to replace the indexation allowance, is now to be abolished. Another example of a tax u-turn by this Government. Remember the zero per cent rate on corporation tax?

The abolition of taper relief is being spun as a necessary measure to deal with the private equity issue. However, they are not the only people affected. Taper relief is available to every taxpayer who disposes of chargeable assets, so they are all affected. See Bel for an interesting piece on the effects of the abolition.

Also with the abolition of taper relief is the 'withdrawal' of indexation allowance. What does this mean? Does it mean that any indexation allowance accrued to date, is lost? When selling a capital asset, allowance is normally made for inflation from the date the asset was acquired, or March 1982, whichever is earlier. This inflation is calculated as an 'indexation allowance', and deducted from any gain on sale. Indexation allowance is abolished for sales by individuals with effect from 1998, and replaced by taper relief. So what would happen would be that, on a sale after that date, indexation allowance is calculated from the date the asset was acquired until April 1998, and then taper relief would be calculated from that period onwards. So the indexation allowance that was built up was preserved.

I assume that, when the April 2008 changes take effect, any indexation allowance accrued until April 1998 will be preserved - there will be a huge outcry otherwise.

Indexation allowance still continues for companies, and I assume that this remains the case even after April 2008.

£30,000 levy on non-domiciles.
Well, you know where they got that idea from. They just added an extra £5,000 to the Conservative Party's proposal.

To read the Pre-Budget Report notes in full, click here.

As you probably heard over the weekend, Gordon Brown decided not to call an election after all. He arrived at this decision after studying polling data that suggested a huge swing to the Conservative Party as a result of their promise to raise the inheritance tax threshold to £1m.

Wow. So tax cuts are popular, after all? Who's have thought it?

The Pre-Budget Report is being delivered tomorrow. Expect Gordon Brown to come up with a copycat inheritance tax cut. But expect it to be, in typical Brown style, stingy, complex and extremely difficult and wasteful to administer.

There might not be any detailed inheritance tax relief in the Pre-Budget Report, but listen out for a statement about wanting to ensure 'fairness' in the inheritance tax system.

But what does it matter if Brown nicks the Tory policy? If he does, everyone would know that that was what he did, and that can only be good for the Conservatives, and the taxpayers who will benefit. If, on the other hand, he introduces a less generous relief than that being promised by the Conservatives, everyone will see that, too.

Arguments about the Conservative Party's promise being 'uncosted' and 'unaffordable' won't work, either. Even if Brown manages to put out figures to claim that the expected tax from 'non-doms' won't be enough to pay for the Conservative tax promise, all the Conservative Party has to do is point to the almost £2bn mistakenly overpaid every year within the tax credits scheme. Those wasted funds should go a long way to paying for the inheritance tax promise. Somehow I doubt that Brown would much welcome attention being drawn to the annual £2bn tax credits overpayments, seeing as he was the Chancellor who presided over the whole shambles.

The Chancellor will deliver the Pre-Budget Report next Tuesday (9 October 2007). Speculation is rife that there is a General Election on the cards. If so, the Report will be all the more interesting for what it leaves out, rather than what it says.

Gordon Brown may have handed over nominal control of the Treasury to Alistair Darling, the Chancellor, but only the very naive would assume that the latter has any real control over what goes into the Pre-Budget Report.