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UPDATE ON PRE-BUDGET REPORT - Cambridge Tax Practice

 

While some changes announced recently by Alastair Darling - such as capital gains tax changes - may alter again before they become law in 2008, there are some important issue which will affect many of our clients and need to be considered now :

UK Tax Residence : Counting days of arrival and departure
An important change is proposed in the method for determining UK residence status.

At the moment, HMRC’s practice has been to not count days of arrival in and departure from the UK - 2007 tax returns are being prepared on this basis. From 6 April 2008 these days will be counted as part of the time spent in the UK.

Remittance basis
Significant changes are proposed to the existing remittance basis of UK taxation. There is to be consultation on the changes later this year.

This is relevant for individuals who are either not domiciled or not ordinarily resident in the UK.

At present, capital gains and investment income held offshore by such individuals are subject to UK tax only to the extent that they are remitted to the UK. From 6 April 2008, a non-UK domiciled individual, resident in the UK beyond seven years out of the past ten years, will either have to pay an additional tax charge of £30,000 per annum or accepted UK taxation of worldwide income whether remitted to the UK or not. In addition, any UK resident claiming the remittance basis may lose entitlement to income tax personal allowances for the year in question.

Inheritance Tax
HMRC have issues a Q&A document relating to the new transferable rate bands. The document is at http://www.hmrc.gov.uk/cto/rate-bands.pdf

We will issue updates when some of the other Pre-Budget proposals conclude their consultation process or announced as law.

Kieran O'Connor
Director
Cambridge Tax Practice Ltd
Tel: 01284 768941
Direct line : 07775 707660
ASK House
Northgate Avenue
Bury St Edmunds
Suffolk IP32 6BB


Posted 24Oct07