|
Businesses are extremely disappointed as Alistair Darling has broken his promise that he would announce on 13 December further changes to the Capital Gains Tax rules that are due to take effect from 6 April 2008.
You may recall that back in October 2007, the chancellor announced that he would introduce a new 18% flat rate of Capital Gains Tax, which was bad news for most businesses as they currently enjoy a maximum tax rate of only 10%. An unprecedented backlash from the business community resulted in the chancellor promising that he would introduce some reliefs/exemptions in the new rules and that he would publish further details on 13 December.
This dithering by the chancellor leaves businesses in an extended period of uncertainty whilst they try and plan for the sale of their business assets. Many businesses will now probably push ahead with a sale, irrespective of whether there are any further changes. This is on the basis that a guaranteed tax rate of 10% is better than the risk of incurring a tax rate of 18% if the sale is delayed until after 5 April 2008. Having said this, it should be noted that there is a degree of flexibility for some businesses, providing appropriate advice is taken.
We are already hearing some of the legal profession say that they are expecting a very significant workload in the next few months as businesses rush to try and crystallise capital gains before 6 April 2008. If you are planning a business transaction in March, you would be well advised to book a time slot now with your solicitor to ensure that the transaction will definitely take place before 6 April 2008 (if this is required from a tax planning viewpoint).
The chancellor did however go ahead with publishing the new tax rules that he is also going to introduce on 6 April 2008 which are intended to bring to an end the current tax planning involving non-working spouses (e.g. by the payment of dividends or the allocation of a partnership share of profits). The rules appear to be very widely drafted and are likely to catch more than their intended target – now there’s a surprise!
Let’s hope that 2008 ultimately turns out to be far less taxing than when 2007 ended.
|
