Edition 62

Darling Unviels Capital Gains Tax
Year End Checklist
Key Dates For Your Diary
Senior Accountant Jodie Osbourne Expecting Baby

Darling Revises Capital Gains Tax

The government has announced changes to capital gains tax (CGT) confirming that it will set a single 18% rate and cease taper relief from 1st April.

Alistair Darling also announced a helping hand to entrepreneurs, offering small business owners a capital gains tax rate of 10 per cent on lifetime gains of up to 1m pounds.

The concession follows intense business lobbying against the Pre-Budget Report decision to impose a flat CGT rate of 18 per cent, scrapping the 10 per cent rate for business assets held for at least two years.

The new relief will apply to anyone who owns a minimum 5 per cent stake in a trading business and if an employee, company director or other office of the company. The revised CGT regime will take effect on April 6.

The Financial Times reported today that the relief will cost an estimated 200m a year, reducing the forecast 900m annual revenue generated by the CGT reforms.

The Treasury reported that approximately 80,000 business owners and investors will benefit from the relief in the next tax year.

Outlined in the Financial Times article, the chancellor told MPs that tax simplification the stated original intent of the PBR reforms remained "a good thing if you can do it". But he said the government had listened to the protests from business, adding: "I recognise that in relation to small business in particular we need to do everything we can to try to help them."

With the end of the tax year approaching, there are a few areas that you may wish to address insofar as your personal tax affairs are concerned.

This is a brief list of some of the issues to consider, and upon which we can advise:

1. Capital Gains:

Review the timing of disposals in light of the changes to the capital gains tax rates to be introduced from 5 April 2008 (we can assist with reviewing the implications of this).
Consider incorporating a partnership now, as this may reduce the capital gains tax payable on a sale of the business after 5 April 2008;
Consider timing of disposals from a cashflow perspective, as any capital gains tax payable on a disposal after 5 April 2008 will not be payable until January 2010.
Look at the availability of negligible value claims on the loss of value of assets (typically shares) held as this will create a capital loss which, in certain circumstances, may instead qualify as an income tax loss.

Make full use of the personal allowances and basic rate tax bands.

Ensure any relevant pension contributions are made;
If appropriate, consider making EIS or VCT investments;
Make use of the tax free investments such as ISAs; and
Prioritise paying off personal debts in priority to business debts as the interest on business debts can qualify for tax relief (obviously dependant on the relative costs of finance).

4. Inheritance Tax:

Review whether the annual allowances have been utilised and think about Inheritance Tax planning.
Review whether you have disposed of assets previously qualifying for Business Property Relief (e.g. sold your business) as the cash proceeds will now be exposed to inheritance tax.
Consider whether your will is up to date e.g. have you married during the year, as this invalidates a will?
We are happy to assist with a year end review if this is appropriate; please contact your team leader if you have any questions.

Key Dates For Your Diary

First self assessment payment on account for 2007/08
Capital gains tax payment for 2006/07
Balancing payment - 2006/07 income tax/class 4 NICs
Last day to file the 2007 Tax Return

No penalty payable if tax return filed today
Due date for payment of Corporation Tax for period ended 30 April 2007

100 pounds penalty if 2007 Tax Return not yet filed. Additional penalties may apply for further delay
Last day for notifying car changes in quarter to 5 January - P46 (Car)

Jodie Osbourne Expecting First Born

We are delighted to announce that our senior accountant Jodie Osbourne is expecting her first child. Her baby will be born around the13th May. We wish Jodie and her partner Darren all the best of luck - she will need it!!