Tax Round Up - post the Finance Acts 2005

October 2005

Due to the general election earlier this year we have had to endure 2 Finance Acts and a whole host of tax law rewrites.

We have listed below some of the new legislation - particularly where this offers a new opportunity.

Trusts - New £500 income band trusts, and trusts for children and disabled beneficiaries will benefit from changes in the rates of tax charged.

Childcare Vouchers - Childcare vouchers can now be offered by employers up to £50 per week, tax and national insurance free to employees with children.

Computers and bicycles - Both items can now be provided by employers free of benefit in kind charges.

Capital Allowances on business premises - This will allow a useful 100% first year allowance for the costs of renovating and converting business premises. Property must be in disadvantaged area and have been vacant for one year. Relief will be clawed back if property is sold within 7 years. As this is a State Aid provision EU approval is required which may not be given until 2006.

Civil Partnerships from 5 December 2005 - Same sex couples can enter into a formal civil partnership from this date. This means they will be treated the same as married couples for tax purposes. Although this will generally advantage couples from an inheritance tax and capital gains tax point of view, there are planning concerns - particularly ownership and elections for a principal private residence and tax credits.

Anti avoidance - Included in both Finance Acts 2005 are a variety of measures to counter what the government considers to be tax avoidance schemes. Whilst the detail is beyond the scope of this short newsletter it does demonstrate the Inland Revenue's commitment to counter such "tax avoidance" arrangements.