The 3CA Budget Summary

Personal tax

“Income shifting”

The Government having lost the Arctic Systems case in the High Court last year were going to introduce their ill conceived ‘income shifting’ rules with effect from 6 April 2008. (‘Income shifting’ is when profits are shared between husband and wife to reduce the tax bill). Needless to say the rules are designed to increase the tax payable!

The Government  have now delayed the start date by a year but if you are likely to be affected there are certain things you should be doing now.

Business tax

Tax relief on equipment

The rules relating to how tax relief is given on equipment (including cars) will change next month (April). If you are contemplating buying equipment in the next few months you should decide if it would be better to buy it now.

Industrial and agricultural buildings allowances

These are being phased out over the next four years.

Low-emission cars

Tax relief at 100% on low-emission cars (CO2 emissions < 120g/km) will continue to be available until 31 March 2013.

Corporation tax small companies’ rate

The small companies’ rate of corporation tax will be increased from 20% to 21% with effect from 1 April 2008.

Capital Gains

Main changes

·         A new single tax rate of 18% will be introduced from 6 April 2008.

·         Taper relief and indexation allowance will be withdrawn after 5 April 2008.

·         Assets held on 31 March 1982 will be valued at market value on that date.

Relief on disposal of a business

A new capital gains tax relief (‘entrepreneurs’ relief) will be introduced for disposals after 5 April 2008.

VAT

Registration and de-registration

With effect from 1 April 2008, the VAT registration limit will increase from £64,000 to £67,000. The de-registration limit will increase from £62,000 to £65,000 on the same date.

Car fuel scale charges

The scale used to calculate VAT on private fuel will be amended from the start of the first VAT period beginning on or after 1 May 2008.