By Steve Theaker, of Peacheys
Alistair Darling presented his first Budget last month and after the Northern Rock saga and the changes of mind on the simplification' of capital gains tax, we are all left wondering if it will be his last.
On the economy, the Chancellor stated that there will be no recession although he conceded that growth up to 2010 will be less than previously forecast.
Borrowing will go up as a result.
The main highlights for businesses and their owners were largely pre-announced and therefore contained few surprises.
One welcome change was that the plans to stop the tax savings available to businesses by income shifting' have been delayed for one year ostensibly to allow more time for consultation although the more cynical might surmise that the proposed legislation was simply unworkable in the first place! The annual charge on non-domiciles is still to be introduced but some relaxations have been made to the original proposals.
Other than that the big event of the Budget continues to be the most significant change to capital gains tax since it was introduced in 1965.
There will now be a flat rate of 18 per cent on all gains regardless of type and regardless of taxpayer except that those qualifying for the new Entrepreneur Relief will be able to make lifetime gains of up to £1m which will be taxed at 10 per cent as they would have been under the current rules.
The danger is that not all of those who would qualify for the 10 per cent rate now will get the new relief after April 5. What was supposed to have been a simplification has become complicated before it even hits the statute books!
The Budget proposals may be subject to amendment in the Finance Act. You should contact us before taking any action as a result of the contents of this summary.
Please contact Stephen Theaker the Tax Partner at Peacheys for further information - In confidence and with no obligation T: 01633 213318 F: 01633 259584 Email: stephen.theaker@peacheys.co.uk
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