'Overspent, not overtaxed' - the Emergency Budget

George Osborne delivered his first fiscal statement as Chancellor of the Exchequer in today's Emergency Budget. As with all emergencies, we saw the flashing blue lights of tax-raising headlines and triage to deal with the wreckage of the structural deficit in the British economy. An environment of economic fear has been whipped up by the media, as we were warned of the impact of the biggest austerity package in living memory.

Elimination of the deficit is to be achieved mostly through reductions in Government spending. However, an additional £8 billion per year is to be raised through net tax increases.

The Budget has been one of tax headlines - or more properly headline rates: of VAT (increased to 20% from 4 January 2011); of capital gains tax for higher rate taxpayers (increased from 18% to 28% from midnight tonight); of capital allowances (reduced by 2%); and of corporation tax (to be reduced in stages to 24% by 2014).

For the more vengeful, a levy on banks is to be introduced from 1 January 2011 (charged at up to 0.07% the value of their balance sheets). In addition, there will be a consultation on a "financial activities tax" (presumably to be abbreviated to "FAT" as in "cat"). Whatever additional tax burden is imposed on the financial sector, it is very likely that the cost will be passed on to us (as borrowers) through higher lending fees and greater margins.

The real estate sector, apart from the part we play in the economy as general taxpayers, has not been singled out for "special" harsh treatment - at least, not yet. There is a hint of further nastiness to come through:

• yet another look at the introduction of a general anti-avoidance rule (previously accepted as unworkable in practice)
• the possibility of changes to the SDLT rules for high-value properties - e.g. by revisiting "real estate-rich" vehicles; again, previously accepted as unworkable in practice.

Wragge & Co's real estate tax experts provide a summary of the main real estate-specific headlines.