Thank you Darling!
Date Published: 25/10/2007
It is now over two weeks since Alistair Darling announced the changes to Capital Gains Tax, Inheritance Tax and Income Tax for ‘foreigners’.
These changes will affect everyone differently.
The proposed changes are ‘manna from heaven’ for higher rate tax-payers with buy-to-let property or holiday homes. In short, they are very likely to pay less Capital Gains Tax on the sale of either type of property.
However, standard rate tax-payers with these properties will be disadvantaged and they may now pay up to 50% more Capital Gains Tax than under current rules.
This means that many investors in UK ’s burgeoning buy-to-let property market should now look carefully at their own tax position, and that of their spouse, with a view to planning to take advantage of the current, and proposed future, tax rules.
There is a window of opportunity to ensure payment of little tax on profits, as possible.
Many of you will also own other investments, such as shares and unit trusts, where these new rules may be either beneficial or detrimental. Again, you should review your position now and act accordingly.
The business community however will be saying, “thank-you”, under their breath, with a feint hint of sarcasm.
These proposed rule changes mean a tax hike of possibly as much as 260%, when you sell your businesses.
This is unfortunate to say the least!
Generally, the formation, and subsequent sale, of a business is not driven by tax. Tax is unlikely to ever become the reason.
However, if you are selling your business, you may well be better doing so before the rules change, dependent upon individual circumstances and tax position.
The changes to Inheritance Tax are almost without doubt of interest to the population as a whole.
Unfortunately, they add nothing for married couples, and those in Civil Partnerships, who have already undertaken some fairly standard tax planning in their Wills.
However, to those who haven’t, these changes mean that you do not need to do so, in respect of your own position, to get the benefit of £600,000 exemption from Inheritance Tax.
The benefit of these changes is that families can now return to the main objective of making a Will, which is to pass assets down to, amongst other recipients, younger generations.
There are a number of issues that should be borne in mind when deciding how beneficiaries should be left assets.
Age, level of responsibility, marital position and a whole host of other factors should be considered to ensure the money ultimately ends up in the right hands, with the minimum of fuss and taxation.
The last of the major announcements is aimed at individuals who have lived in the UK for at least seven out of the last ten years, whilst having their ‘natural home’ overseas.
People in this group really should now seek professional advice.
The choices from April next year are to pay £30,000 annually to be left alone, or pay tax on worldwide income.
Finally, don’t forget to say, “Thank-you darling”, to your beloved every day.
