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A more straightforward and sustainable system?
Tax changes not welcomed

Tax changes announced by the Chancellor aimed at cracking down on high-earning private equity executives could hit thousands of small companies, employees and shareholders. Mr Darling argued that by introducing a flat 18 per cent rate of capital gains tax for all investors, he would “make the system more straightforward and sustainable.” He also added it would ensure “those working in private equity pay a fairer share.”

Many believe that the changes will hit other groups apart from private equity.

These could include entrepreneurs selling their companies, employee shareholders, investors in AIM-listed companies, start-ups and “angel investors” in unlisted firms would see their tax bill increase from 10 per cent to 18 per cent.

There was also a plan announced to levy a £30,000 charge on non-domiciles who have lived in the UK for seven years and a move to raise inheritance tax thresholds for couples. The rules on residence and domicile are expected to raise an extra £800m for the Treasury in 2009-10, falling to £500m in 2010-11.

The effect of the credit squeeze on public finances forced Mr Darling to announce tax rises and a substantial increase in government borrowing.

Treasury forecasts show public borrowing will be £7bn higher than expected in 2008-09, the result of slower pay growth and reduced City profits.

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Levels and bases of, and reliefs from, taxation are subject to change.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Any references made to the Pre-Budget Report may be subject to the Finance Bill becoming law.

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