Many readers will have taken a keen interest in the Chancellor’s much vaunted “Budget for Growth” on 23 March. From a tax perspective this gave us little to write home about. Most individuals will be largely unaffected tax-wise, but there some announcements as below that may be of interest. If you would like to understand in more detail how these or any other points arising from the Budget affect you, please contact us.
- The lifetime limit on gains to which Entrepreneur’s Relief can apply will be doubled to £10m for qualifying disposals from 6 April 2011. The 10% entrepreneurs rate will then represent a maximum potential tax saving of £1.8m when compared with the current 28% top rate of Capital Gains Tax ("CGT") applies in certain cases when an asset is sold for more than it was originally purchased. The taxable gain (profit) may be triggered following the transfer of an asset, although commonly this would follow a sale. A number of tax reliefs are available to exempt or reduce the tax that may apply. Basic tax planning may... More.
- “Non-doms” living in the UK will be liable to pay a £50k annual charge to be taxed on the remittance basis once they have been in the UK “for 12 years”. Precise details will no doubt follow, but the existing £30k remittance basis charge is retained for those who have been UK resident in at least 7 of the previous 9 years.
- Some better news is that income tax reliefs for Enterprise Investment Schemes (EIS) and Venture Capital Trusts have been augmented. Most significantly, from 6 April 2011, the value of an EIS investment which is allowed as a tax reducer will increase from 20% to 30%. Subject to approval, the maximum annual value of an individual’s EIS investment will also be doubled to £1m from April 2012.
- The main rate of corporation tax will be cut to 26 per cent for the Financial Year beginning April 2011, followed by three further one per cent cuts to 23 per cent by the Financial Year beginning April 2014. This is in effect an add-on to the annual one per cent drops in the main CT rate to 24 per cent previously announced in the June 2010 Budget.
- As widely predicted, it is intended that the income tax and National Insurance regimes will be merged. This would be a welcome simplification but, as the Chancellor acknowledged, it will be a lengthy process. We would hope for detailed consultation with the tax advisory community to arrive at a workable system.
- The Chancellor also gave the strongest indication yet that a statutory residence test would be introduced and undertook to make no further changes to the “non-dom” rules in this Parliament. This should provide greater certainty and is good to see.
- There were some interesting changes to the reliefs associated with charitable giving, including a one-tenth reduction in the inheritance tax rate when at least one tenth of a person’s net estate is donated to charity, and availability of Gift Aid on small donations without requiring taxpayer declarations.
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