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Budget Statement

 

Gordon Brown delivered his Pre-Budget report to the House of Commons on Monday 5 December.  We are pleased to highlight some of the key measures.

This summary is not a fully comprehensive guide but is designed to focus on specific areas which are of interest and relevance to our clients.  If you would like help in understanding the impact of the Pre-Budget proposals as far as it affects you, please Contact Us.

Here are some immediate headlines:

Corporation tax - The nil-rate of corporation tax has been abolished. The Chancellor believes it has lead to small businesses incorporating solely to reduce their overall tax charge.
 
The lowest corporation tax rate is now 19%, but the 50% Initial Capital Allowance for small businesses is to be extended.
 
Tax & NIC rates and thresholds - details for next year were announced.

SIPPs investing in residential property - tax breaks for second homes end before they even start.

The Chancellor announced that tax advantages will be removed for Self Investment Personal Pension Plans (SIPPs) and Small Self Administered Pension Schemes (SSASs) investing in residential property, fine wine, classic cars, or art and antiques.
 
Despite promising wide ranging reliefs less than a year ago the Chancellor's "U-turn" on pensions will be a blow to those who have already set up SIPPs in anticipation of the post A-day relaxation in investment rules. These rules will apply to (SIPPs) and (SSASs) investing directly in residential property or chattels, or via a close proxy - for example a company owned 100% by a SIPP.

We await the actual legislation which will clarify the definition of the "residential property".

REITs - property investment for the future - Savers will still be able to invest in houses and other property via tax-efficient property investment vehicles to be known as REITs. There are plans for these to be listed on the Stock Exchange.

Property planning gains - consultative process is a first step towards a tax charge on part of the increase in land value when planning permission is obtained.

Anti-avoidance - the screw tightens further.

There are extensions to the existing regime whereby businesses and their advisors must notify HMRC of tax avoidance schemes and arrangements within 30 days of implementation across income tax, corporation tax and capital gains tax generally.

There is new legislation proposed to tighten up what the Chancellor sees as loopholes, which are exploited for the purposes of mitigating tax.

The tax breaks for investments in the Film Industry however are to be extended.

Leasing - new rules will be introduced governing the operation of leases. The changes are wide ranging but principally affect leases of more than 5 years duration.

Research and developments - improvements to be made.

The Chancellor wants Britain to be at the forefront of genetics and stem cell research and a leading location for research in new drugs and treatments. He is introducing reforms to help access the R&D tax credit.
This existing relief allows companies to obtain tax refunds by giving up losses incurred in qualifying R&D even where no profits have yet been made and so no tax has yet been paid.

More details will follow as they become available.  

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