Pre-Budget Report 2007

Below are the key announcements in today’s speech by the new Chancellor, Alistair Darling MP.

New capital gains tax rate of 18%
This will replace the existing taper relief regime for individuals who generally would pay at either 10% (business assets) or 24% (non-business assets). Some clear winners and losers here.

Inheritance tax nil rate band of £600k for married couples
This effectively adds together the existing bands of £300k for individuals and applies to couples who are either married or civil partners. A welcome change which reflects common sense and may actually encourage some people to tie the knot! This measure is to be backdated for widows and widowers.

Self assessment payments on account
The minimum annual tax liability to rise from £500 to £1000 before people have to make six monthly payments on account of their self assessment liability.

Small companies
New rules to be introduced from April 2008 to prevent Arctic Systems scenarios arising, e.g. married couples shifting income to the lower earning spouse.

Non-domiciled individuals
Tax charge of £30,000 for individuals who are non-UK domiciled but have been UK resident for seven years. Possible further charges after ten years of residency.