PBR 2007: At a glance guide A summary of the main tax announcements from the Pre-Budget Report, combined with 2008/09 measures which were announced back in March 2007 by Mr Darling’s predecessor: Personal allowances Changes to allowances will be published once the RPI for September is known. Measures already announced for 2008/09: The aged related personal allowances for those aged 65-74 will be increased by £1,180 over inflation for 2008/09. Income tax rates No changes in the PBR, other than: Measures already announced for 2008/09: The 10% starting rate band is abolished for earned and pension income from 2008 The 10% starting rate remains for savings and capital gains Basic tax rate reduced to 20% Dividend rate remains unchanged Basic rate tax band increased by indexation, and from 2009/10 will be increased by £800. Top rate band of income tax to rise to £43,000 by 2009. National insurance The exemption from National Insurance Contributions (NICs) of holiday pay paid via a third party is to be removed for all sectors outside the construction industry. Measures already announced for 2008/09 Upper earnings limit raised by £75 by 2008 and aligned with higher rate threshold by 2009. Class 4 upper profits limit increases by £3,900 *** Tax administration SA Payment on account The threshold will rise from £500 to £1000 for taxpayers making payments on account (POA) of their annual income tax liability under the self-assessment system from 6th April 2009. Changes to filing deadlines No changes in the PBR, other than: Measures already announced for 2008/09: Paper returns for 2007/08 are due by 31st October 2008 and on-line by 31st January 2009. The SA enquiry window will be aligned with the filing date - from? For CTSA the enquiry window will be aligned with the actual date of filing from 2008 (with the exception for large groups). Penalties for incorrect returns: New provisions set for 2008 in line with the consultation proposals in "Powers, deterrents and safeguards" to penalise according to the amount of tax understated and taxpayer behaviour. Anti-avoidance measures A review was announced on how anti-avoidance legislation can best meet the aims of simplicity and revenue protection. A multitude of tax fixes were announced which covered areas such as leased plant and machinery and corporation tax disguised interest. A review of “income splitting” was also announced. *** Employee benefits, expenses and taxes Company cars An increase in the fuel benefit in kind charge for private useage was announced. Measures already announced for 2008/09: Cars which can run on bioethanol E85 fuel attract a 2% discount from the relevant percentage *** Business taxes Sole traders and partnerships The Chancellor announced plans for simplification detailing no specific measures. For tax rates, allowances, Class 4 NI and SA filing, see above. Partnership tax is going to be reviewed to tackle "income splitting". Small Companies Consultation is announced to combat "income splitting" of dividend income by couples. A review is announced on how the Corporation Tax rules for related (we assume this means “associated”) companies might be simplified. Measures already announced for 2008/09 The small company corporation tax rate will be raised in stages increasing to 21% in 2008 and 22% by 2009. Large companies A new Large business document: Making a difference: clarity and certainty has been published which outlines plans to make the UK more attractive for big business. Measures already announced for 2008/09 The mainstream rate of corporation tax will be cut from April 2008 to 28%. Capital allowances Measures already announced for 2008/09: Allowances on long life assets to increase from 6% to 10%. Integral fixtures to become as long life assets and subject to 10% allowance from 2008, subject to consultation Phased removal of IBAs and ABAs by 2011. An annual investment allowance of £50k p.a. to replace first year allowances (FYA) for small and medium sized business. A reduced short life writing down allowance on the general pool from 25% to 20% A payable tax credit for losses incurred on "green technologies" - subject to consultation on proposed design and scope. Extention of capital allowances to expenditure on building regulations in response to a notice from the Fire Authority repealed. Research and development Measures already announced for 2008/09: An enhanced deduction for small companies from 150% to 175% Large company deduction increases from 125% to 130% Landlord’s energy saving allowance Measures already announced for 2008/09: Availability of the allowance extended until 2015 Will apply to corporate landlords, providing State Aid clearance obtained *** Stealth taxes No announcements made! Some allowances and limits are never or rarely raised and remain steadfastly not in line with inflation, or with anything else, for that matter: Small company profits limit - £300,000 Large company profits limited - £1,500,000 'Higher paid' employee rate for PAYE/NI benefits in kind purposes: £8,500 (unchanged since 1979). 'Expensive car' for leasing and capital allowances: £12,000 Approved share scheme limits Employer supported childcare £55 p/w *** VAT A review by the Treasury is announced on how to simplify VAT rules and administration in the UK and EU. Secondary legislation will be introduced to ensure that renovations and alterations to residential properties that have been empty for at least two years (previously three) will be eligible for a reduced rate of VAT of 5%. Stamp duty land tax (SDLT) Simplification of Ad Valorem stamp duty, SDLT on small property transactions, together with amendment to investment partnership anti-avoidance rules Measures already announced for 2008/09: Relief from SDLT for new zero carbon homes to apply from 1st October 2007. *** Non domiciled individuals UK residents who are non-domiciled will pay an annual charge of £30,000 in respect of the foreign income and gains which they keep abroad and on which they do not pay UK tax. The charge will apply if they’ve been resident here for more than 7 years. Users of the remittance basis also lose their tax free personal allowances. The remittance basis rules will be tightened up together with the day counting rules. Consultation will decide the detail and whether those who have been resident here for more than 10 years should contribute more. *** Savings, investments and pensions No announcement were made in the PBR. Measures already announced for 2008/09 Increasing cash ISAs limit to £3,600, stocks and shares ISA limit £7,200. Max. overall £7,200 p.a. Foreign property ownership: Legislation enacted in FA 2008 to ensure that individuals purchasing property overseas via a company will not suffer a benefits charge as "shadow directors". Non-repayable tax credits to be accounted for on foreign dividends providing shareholder owns less than 10% of the overseas company and less than £5,000 in dividends from those companies *** Planning taxes and reliefs The planning gain supplement has been scrapped, and will be replaced by a local planning charge in its place. *** Green/Eco/Carbon taxes and allowances Motor vehicles, vessels and airplanes Measures already announced for 2008/09: Fuel duty: to increase by 2p per litre on 1/4/08 and juggling with differential between alternative fuel sources Fuel used for private pleasure flying and boating will go up; due to the expiry of the UK’s derogations from the Energy Products Directive. Reduced and exempt rates of duty will no longer apply. Insurance premium tax It was expected that the results of review of this tax would be announced, but nothing has been forthcoming. *** Capital gains tax A complete reform of CGT by abolishing taper relief and indexation and introducing a single rate of 18 per cent from 2008-09. The annual exempt amount will remain £9,200 for 2007/08 and the 2008/09 exemption will be announced in Budget 2008. Measures will be put in place to simplify the share identification rules. New code of conduct for Private Equity The “loophole” will be closed, in that the Private Equity industry will be affected by the changes to the CGT regime and pay tax at 18%. Inheritance tax Married couples and civil partnerships may combine their tax free allowances to a maximum of £600,000 from today, rising to £700,000 by 2010. This is back-dated for recent widows and widowers. Measures already announced for 2008/09: The IHT threshold for individuals is raised to £312,000

The many ta schemes open to UK investor using the 10% tax is no longer with us! Who suffered?

Colin Can please compare before and after in relation to CGT on a buy-to-let. In which situations will investors benefit and in which will they be worse off as a result of the changes to CGT. Clearly a 40% tax payer selling a property after a couple of years is better off but I guess a lower rate payer who has held a property for 10 years or more may be worse off. Is that correct?

It will be interesting to see what impact this has on BTL sales, and wider market prices, over the next year or so. Presumably anyone selling or thinking of selling a BTL at the moment will hold off until next April. So we can expect an immediate drop in number of flats on sale now followed by a surge in April, of both heldback sales and from landlords taking an opportunity to sell up without paying punative tax rates. If you think about it, the market effect of this this is pretty much a mirror image of the withdrawl of dual mortgage tax relief -and we all know what happened then.