In support of the Government’s stated aim to move the economy from rescue to reform and from reform to recovery, Chancellor George Osborne has made several tax changes.
These are mainly focused on wealth creation and philanthropy, two key areas of policy for the coalition and of vital importance to private client practitioners and their clients.
On inheritance tax, the nil-rate band remains unchanged but the Chancellor announced an attempt to further encourage charitable giving.
Charitable gifts are already exempt from IHT but the Government will now consult on also reducing the tax rate from 40 per cent to 36 per cent where 10 per cent or more of a net estate (after deducting IHT exemptions, reliefs and the nil-rate band) is left to charity, after April 6, 2012.
Non-UK domiciles continue to be a target for the coalition.
The current £30,000 annual charge for those who claim the remittance basis of taxation and who have lived in the UK for at least seven of the last nine years will continue. But the Government will consult on introducing a £50,000 charge from April 2012 for people who have been resident for 12 or more years.
On a more positive note, the tax charge these private clients would otherwise pay on income or capital gains remitted to the UK for the purpose of commercial investment in UK busin- esses, will be removed.
The Chancellor confirmed there will be no other substantive changes to these rules for the remainder of the current Parliament.
The significantly increased use of consultation by the coal- ition in the area of tax reform is to be welcomed. It is to be hoped this will ensure that the unintended consequences, so frequently identified in the past by expert private client practitioners, will be avoided.