Business Alert November
Pre-Budget changes rumble on. IHT nil rate bands published.
16.11.2007
Pre-Budget changes rumble on. IHT nil rate bands published.
- Pre Budget Changes Rumble On
- IHT Nil Rate Bands Published
- Green Cars
- Construction Scheme - Review Process
- R & D Units a Success
Business leaders, professional bodies, and even the unions have something to say about the changes planned for capital gains tax. Although the Chancellor’s announcement is a definite simplification, the message is “at what cost?” Business representatives have met with the Chancellor to put the case of those who were hoping to dispose of their business in the future, and who have been worst hit by the reforms. It is imperative that any taxpayer holding investments or business assets considers the impact of the planned changes and is ready for action if no further changes are announced. Some lucky winners may also plan to delay sales until after April 5 to take advantage of the planned low rate of 18%. You have been given several months to act – you will need to move quickly to develop a plan of action.
From April next year, company cars which run on bioethanol, or an 85% mixture of bioethanol and unleaded petrol (known as E85) will attract a discount of 2% when calculating the benefit in kind. On an average price company car, this would reduce the benefit in kind by around £350 – 2% of the list price. Those choosing new company cars should be aware of this, and also the new rate of 10% coming into force next year for cars emitting no more than 120g/km of CO2.
Construction Scheme - Review Process
The new review process for those registered for gross payment under the construction industry scheme is now under way. Under the process (known as TTQT) subcontractors’ compliance record over a 12 month period is reviewed, and if they have breached the rules, they will be reclassified as subject to tax at 20%. This review will happen on an annual basis, but as a random occurrence, so that businesses will not know in which month they are subject to review, as it will vary from year to year. Over the course of a year, all businesses with a gross payment registration will be reviewed. More about this process and the implications can be found on the CIS area of the HMRC website.
The Pre Budget Report introduced the transfer of nil rate bands between married couples and civil partners with immediate effect. This means that widows and widowers will benefit from the unused nil rate bands in their partner’s estate on their death. Claims will be made on the second death, and the change applies to anyone dying from 9 October 2007, irrespective of the date of their spouse’s death. This means that many widows and widowers will need information about the IHT or other estate tax rules on the date of death of their spouse. Her Majesty’s Revenue and Customs have therefore published the nil rate bands for Inheritance Tax, Capital Transfer Tax and Estate Duty as far back as 1914. Claimants will, of course have to provide evidence about the disposition of the deceased’s estate at that time, to show that the nil rate band was not fully utilised.
Large companies claim research and development tax relief through the Large Business Office structure within HMRC, but smaller companies had experienced problems progressing their claims to relief, so a new regional structure of specialist units was created last year. The report on the first year of operation quotes a total of over 5,000 claims successfully dealt with, and the sum of £150 million paid by way of special tax relief for R & D. Case studies on small companies obtaining help with their claims from HMRC are to be published shortly, to encourage more companies to claim.
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