Taxing times ahead - beware the 6th of April!

On the 6th April 2008 the tax system in the UK is undergoing a number of radical changes. Businesses and individuals have been given prior warning, but is the message getting through?

Simon Clarke, Finance and Technical Director of TaxAssist Accountants has the following advice to offer:

“If you are in business, have complex personal tax affairs, or have a low income, you will be affected by a number of changes next year. In particular:

•    Income Tax Rates – Although the basic rate of income tax is dropping from the present 22% to 20%, the existing starting rate of 10% is to be abolished. Individuals on low incomes will pay more tax as a result.
•    Pension Contributions – An unwelcome effect of the lower basic rate tax rate is a lowering of total contributions to your pension scheme. At present if you pay £78 into your scheme the Government will top up the contribution with the basic rate tax deducted, £22. Total contributions invested £100. After the 5 April next year you will need to increase your contributions to £80 per month, tax top up £20, to achieve your £100 total investment.
•    Capital Gains Tax – The present indexation and taper relief are to be scrapped and replaced with a single tax rate of 18%. If you have owned business assets (shares in your own company for example), for a number of years, you will likely suffer a higher tax charge if you dispose of those assets after 5 April 2008. There will be winners and losers.
•    Family Businesses – If you have a family owned company or partnership the Revenue are introducing legislation to stop the arbitrary sharing of profits and dividends just to save tax. After the 5th April 2008 you may be asked to justify the underlying commercial reasons for the way in which income is allocated to family members, particularly husbands and wives.

The impact of these tax changes will affect many small businesses after the 5th April 2008. However there is still a ‘window of opportunity’ between now and the end of March 2008; a period of time for implementing tax planning that will help to counter the changes to come.”

Simon continues:

“The changes to Capital Gains Tax and the ‘shifting of income’ between family members will have far reaching consequences for owners of small businesses. There is no point in waiting until it is too late to take action. For instance anyone who owns assets that would be subject to capital gains tax if sold now, should seek professional advice at the latest February 2008 – there may still be strategies that can be implemented that overall will save you tax.”



For further information please call 0845 0096543 to be put in contact with your local TaxAssist Accountant or visit www.taxassist.co.uk

If you are interested in becoming a TaxAssist Accountant please call 0800 0188297 or visit www.taxassist.net



ENDS







EDITOR'S NOTES

TaxAssist Accountants was founded in 1995, specifically to serve the tax and accountancy needs of small business in the UK.  Its Support Centre is in Norwich, and currently TaxAssist Accountants has a network of offices with over 160 accountants and tax specialists around the country.


Finance and Technical Director – Simon Clarke FCCA

Simon worked with a number of small local firms of accountants in accounts preparation and tax planning before moving to PriceWaterhouseCoopers in 2000.  Simon qualified as a Chartered Certified Accountant in December 1998 and became a Fellow in May 2004.  He joined TaxAssist Accountants in July 2004 as Head of Technical Services.  Simon heads up the technical and finance teams and takes responsibility for the help line, technical releases, the technical support site and franchisee visits.  

Chief Executive - Karl Sandall FCIB

Karl joined TaxAssist Accountants in January 2000 after 26 years with HSBC.  As well as being a Fellow of the Chartered Institute of Bankers, Karl is also a Business Advisor to the Bank of England Monetary Policy Committee.