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February 2008
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Contact Us :
Address : 68 Great Portland Street, London, W1W 7NG
Telephone : 020 7637 3717
E-mail : Info@cwg.org.uk
Latest News
Entrepreneurs Relief - Further to the pre-budget report set out below, the Chancellor on 24th january 2008 announced a new entrepreneurs relief in response to pressure from the business community. The first £1M of gains qualifying for relief will be charged at an effective rate of 10%. Gains in excess of £1M will be charged at 18%. An individual will be able to make more than one claim for relief, up to a lifetime limit of £1m of gains. There will be no minimum age limit and relief will be available where the relevant conditions have been met for a period of one year. The relief will apply to gains arising on the disposal of the whole, or part, of a trading business that is carried on by the individual, either alone or in partnership. It will also apply to the disposal of shares in a trading company, or the holding company of a trading group, providing the individual holds broadly a 5% shareholding and has been an officer or employee of the company.
Pre-Budget Report 2007 - The speech may have been quite brief but the detail was revealed in the accompanying press releases and documentation. The major proposals were as follows and you should contact our office if you need any further information:
The abolition of taper relief and indexation allowance for individual capital gains with the introduction of a flat rate CGT of 18%. A significant change in IHT relief for married couples and civil partners (see below). In the light of the Arctic Systems decision there are proposals to stop the tax savings available to businesses by income shifting between family members (see below). Increases in the scale fuel charges.
Income Shifting Consultation - We have previously reported on the long running saga of Geoff and Diana Jones and their company Arctic Systems Limited. After numerous appeals the House of Lords confirmed that HMRC were wrong to attack husband and wife businesses who take profits out by way of dividend on a 50/50 basis in line with their shareholdings. Following HMRC's defeat in this case, the government has drafted legislation to prevent a tax advantage being gained through what has become known as 'income shifting'. This legislation will apply from 6th April 2008 to company distributions, usually in the form of dividends and profits from a partnership. The proposed rules are widely drafted and will affect many owner-managed businesses.
We will, of course, keep you informed of developments, however if you have any questions in the meantime, please contact us.
Inheritance Tax Nil Rate Band - The Chancellor announced in his pre-budget speech a change to the way in which the Inheritance tax nil rate band, currently standing at £300,000, can be used for married couples and civil partners. Before the introduction of this change, where an individual died and left some or all of their property to their spouse or civil partner, then the transfer was exempt from IHT. However, on the death of the second spouse or civil partner, only one nil rate band was available, meaning that a nil rate band had been effectively wasted. This is because of the IHT exemption for transfer between spouses or civil partners. The pre-budget change means that the proportion of any nil band unused on the first death may be used when the surviving spouse or civil partner dies. This change is effectively backdated for situations where a spouse or civil partner died before the announcement of the change, as long as the surviving spouse or civil partner dies on or after 9th October 2007.
Please contact us if you would like more advice on this issue.