Andrew Cardwell, a senior manager for Deloitte in the Island, takes a look at the news to emerge from yesterday's UK Budget.

Mr Cardwell said: "Although this emergency Budget was arguably the most severe for decades, it was encouraging to see that there was a focus on business growth.

"Tighter measures included a significant increase to the VAT rate and an increase in the CGT rate on non-business assets for higher rate taxpayers.

"The increase in the CGT rate applicable to higher rate taxpayers may have an adverse impact for non-resident trustees who are looking to make capital payments to UK resident beneficiaries, but it might be more positive news for offshore life offices as the gap between the CGT rate and the income tax rate applicable to life policies narrows.

"Two points of interest to offshore practitioners are the impending review of the taxation of non-domiciled individuals and the consultation on a general anti-avoidance rule.

"For obvious reason, it isn’t clear where these will lead, although we suspect that for non-domiciled individuals, it could mean an increase in the ?30,000 annual charge to use the remittance basis or a shortening of the seven year rule for new residents. 

"In light of the fact that consultation documents on business taxation have now been issued by the Isle of Man, Jersey and Guernsey, it was interesting to note that the UK corporate tax system is apparently moving further towards a territorial basis of taxation.

"There did not appear to be any measures aimed directly at offshore. 

"One point of interest in the local economy is that the increase in the VAT rate in January 2011 should generate further revenue receipts for the Island, providing the increase doesn’t lead to a compensating fall in demand in the economy."