David Smith
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ALISTAIR DARLING will not make further significant concessions on either the taxation of “nondoms” or capital-gains tax (CGT), Whitehall sources say.
He is also set to press ahead with tax changes that leading accountants say will leave small businesses with a tax bill running into hundreds of millions and a huge increase in red tape.
The chancellor, despite proposing a lifetime “entrepreneurs’ relief” of £1m to soften the blow of the abolition of CGT taper relief and an increase in its minimum rate from 10% to 18%, has been under pressure to make further changes.
Business groups have also urged him to delay for a year the £30,000 annual levy on nondoms until disclosure and other issues are sorted out. But the new levy, which will apply to nondoms only after seven years in the UK, will go ahead.
The Treasury and Revenue & Customs are also taking a hard line on so-called income-shifting between husbands and wives. The measures, brought forward for consultation after the Revenue lost the £500,000 Arctic Systems case in the Lords, will raise £260m in its first year by clamping down on the way incomes and profits are allocated between husbands and wives within family businesses.
The Institute of Directors, in its budget submission published this week, will seek to delay the move. “The proposed legislation is wholly unsatisfactory,” it will say. “It will impose huge administrative burdens by requiring the application of an arm’s-length test that makes no sense in the context of family businesses.”
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"The measures, brought forward for consultation after the Revenue lost the £500,000 Arctic Systems case in the Lords, will raise £260m in its first year by clamping down on the way incomes and profits are allocated between husbands and wives within family businesses.". Apart from discrimination against married couples in this way being totally unfair and arbitrary, it is simply not true that £260m will be raised in the first year of any changes. People will find other ways of managing their family businesses, that is all. Supposing a husband and wife got divorced - but still lived together and shared dividends. What then? IR35 showed that stupid tax law does not raise revenue. This Government makes me sick!
Richard, Worcester, England
When I started my family business I knew little of CGT, NI, PAYE, VAT, benefits in kind, or any of the other statutory tools of financial extraction imposed on us. (is IST or 'income shifting tax' the next one?)
16 years later the two of us have personally generated an enterprise that has trained and employed over 40 people, unfailingly paid over hundreds of thousands of pounds in tax revenues every year and provided award winning services to an international clientele.
The well meant taper relief was the closet we got to a pat on the back.
The new proposals do not encourage us to make the extra effort required to convert a small time success in to a big time one, or to repeat the process should we ever sell up.
It seems that if pets look like their owners, then the country is looking like its Governors - unattractive.
Pete, London,
Is Darling so beholden to his trade union cronies that he insists on driving the country into a ruin reminiscent of pre-Thatcher UK once again? Anyone who thinks that highly capable people, with earnings to match, are obliged to stay here, especially in this day and age, is quite simply not fit for office.
James Smythe, London,
The really worrying thing is not the tax; it is the "huge increase in red tape".
The desire of civil servants to complicate systems to ensure their own employment and pensions throws so much sand into the gears that the whole machine will eventually seize up.
Peter, Oxford,
If these measures hasten Labour's demise, I am all for them.
Edwin, Bucharest,
I totally agree with abolition of CGT Taper Relief. As a normal person who likes to conduct their Tax Affairs in a straight forward manner without involving rip off accountantants who basically are just taking a little bit of cream for themselves. Is it not easier to work out the CGT yourself in this new simple manner. Revenue benefits with more income and so does the customer. As the saying goes K.I.S.S. (Keep It Simple Stupid)
K S, Liverpool,