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Blow for smaller IFAs as taper relief is scrapped

Chancellor Alistair Darling’s announcement that he will scrap taper relief and introduce an 18 per cent flat rate of capital gains tax could seriously harm IFAs and other small businesses, warns tax consultant Chiltern.

In his first pre-Budget report, Darling said that from April 2008 he will remove the 10 per cent accelerated taper relief on disposals currently enjoyed by investors in Alternative Investment Market companies after two years, which could cause a short-term sell-off.

Chiltern director of direct tax Paula Tallon says the changes are targeted at private equity barons but will hit investors in small businesses, employees and shareholders in private companies, while tax for investors in property companies and large quoted companies will fall from 40 per cent.

She says: “There will be no incentive to invest in small companies and these businesses will lose much-needed funding. This is a case of the rich getting richer and poor getting poorer.”

In a separate move, the Government tried to steal the Conservatives’ thunder on inheritance tax by enabling married couples to share their nil-rate bands, effectively doubling the threshold from £300,000 to £600,000. This will be backdated for widows and widowers and the threshold raised to £700,000 by 2010.

Skandia head of tax and financial planning Colin Jelley says: “There will be those for whom it makes no difference such as divorced people, those who have never been married and those who, with advice, have already made plans to maximise their use of the nil-rate band.”

Darling said: “If instead I was to raise the inheritance tax threshold to £1m, it would cost a further £2bn. Let us now have the debate about what is affordable and what is fair in the future of inheritance tax.”

Conservative Shadow Chancellor George Osborne said: “The public will see today’s measures as a desperate, cynical stunt from a desperate and weak Prime Minister. This Prime Minister’s name may appear on the cover of books about courage but it is never likely to appear in the index.”


PBR: Grant Thornton warns non-dom clock began ticking in 2001

Grant Thornton has warned non-doms that have been resident in the UK before April 2001 will begin paying the Government’s new charges from April 2008.In his Budget Speech, Alistair Darling rejected Conservative plans for a £25,000 annual non-dom levy as it would discourage people coming to this country for short term work.Instead the Government will […]

Abbey drops prices on fixed rate mortgages

Abbey has announced further rate cuts to its five and two year fixed rate deals, effective tomorrow.The core five-year fixed rate deal, available through brokers, has been cut by 0.15 per cent and is now priced at 5.85 per cent with a £589 fee. The remortgage option, which includes free legals and free valuation, is […]


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