New Legislation - publication imminent
December 2007
We are expecting the Revenue to publish details of changes to the following areas of tax:
1. Capital Gains Tax
Draft legislation is due for publication December 2007 explaining the detailed changes to CGT from 6 April 2008. This will provide us with the small print. At present all we have to go on are the disclosures made by Alistair Darling in his Pre Budget Report on 9 October 2007.
If there are no significant changes to the October position, we can expect the Revenue to provide the draft legal framework for CGT from 6 April 2008 that will operate without the benefits of indexation or taper relief. There is also the possibility that a simplified form of retirement relief may be included to reduce the tax payable when businesses are sold. It is rumoured that the first £100,000 of gains on retirement may be exempted from charge to tax, or subject to a lower rate of say 10%.
We will include a further update on this topic in the January 2008 newsletter.
2. Income Shifting
Where a husband and wife are in business together there is a risk that the Revenue will become interested in the commercial justification for the way in which they split earnings or profit.
During 2007 the Revenue were defeated in the House of Lords in the Arctic Systems case. Here HMRC sought to assess the husband on his wife's income from their business, on the basis that he was responsible for the lion's share of the income generation and management. The Revenue's position failed due to flaws in their legal arguments. As a direct result of this outcome the Revenue promised to legislate to enable them to challenge similar cases in the future.
We are expecting HMRC to publish details of new legislation to deal with income shifting, either late November or December 2007. This will have ramifications for all husband and wife business arrangements. (It will also include businesses run by Civil Partnership couples.) Again we will advise clients as soon as we have the detail and will publish our comments in a forthcoming newsletter.
3. Residence and Domicile
Changes to the tax rules regarding residence and domicile are also expected late November or early December 2007. We will publish details as soon as they become available.
