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Overview

The Pre-Budget Report (and the Press Release Rev/C&E1 in particular) makes reference to the first phase of consultation on corporation tax reform following the issue of the consultation document in August 2002. Once these responses have been analysed the Government are committed to consulting further.

The following is a reminder of the issues

The Inland Revenue in their consultation are seeking to consult with a view to modernising corporation tax so as to

– improve business competitiveness &#45 of particular interest to the community of financial advisers is the expressed intention to look closely at the removal of tax distortions that impact on commercial decision making. The Government&#39s expressed aim is that business decisions should be made on commercial rather than tax grounds; and
– maintain fairness in taxation &#45 especially ensuring that individual businesses pay their fair share of tax in relation to their commercial profits.

One of the key drivers of tax change is the Revenue&#39s apparent desire to tax all types of income and gains in the same way. Another is continuing the move to align taxable profits with accounting profits. The Revenue focus in particular on the fact that, for companies (unlike individuals), the indexation allowance is available to reduce taxable capital gains whereas commercial accounts are generally not inflation adjusted and are prepared, in most cases, on an historic cost basis.

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Other impacts

(a) Increase in Lower Earnings Limit (LEL)The increase in the LEL to £77 per week will mean that in 2003/04 any individual who is to benefit from the 40% accrual on deemed earnings based on the Low Earnings Threshold (ie. £10,800 in 2002/2003) under S2P will need to have earnings of at least £4,004 pa […]

Spowart to take IF to US and Europe

Intelligent Finance chief executive Jim Spowart is quitting the role for another position in HBOS, reporting directly to group CEO James Crosby.He is being replaced at IF by head of intermediary sales at HBOS Retail, Grenville Turner.In his new role, Spowart, based at group headquarters at The Mound in Edinburgh, will be responsible for exploring […]

Threadneedle fuses bonds with equities

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Mortgages plc achieves record lending figures

Specialist lender Mortgages plc received £100 million of mortgage applications in October and completed over £70m loans.It says this is a significant achievement since Japanese investment bank became its parent company at the end of last year.It says in the first seven months of trading this financial year it has completed more applications than in […]

Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

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