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Rates of tax

This is increased from £7,500 in 2001/2002 to £7,700 in 2002/2003 for individuals and personal representatives, and (in most cases) from £3,750 to £3,850 for trustees.

No change has been proposed regarding the rates of capital gains tax which are, of course, largely as for income tax. In brief terms, these will be subject to tax as if they were the top slice of income and be taxable at 10%, 20% (basic rate tax band) or 40% as appropriate.

For example, as a result of a long period of effective tax and financial planning John has taxable income (ie. after personal allowances and deductions) of £1,440. He then realises £37,800 of capital gains (after the annual CGT exemption).

John&#39s capital gains will be subject to tax as follows:-

£480 @ 10% (up to £1,920)
£27,980 @ 20% (up to £29,900)
£9,340 @ 40% (over £29,900)

Whilst particularly welcome in respect of income tax, it will be comparatively rare for an individual to have an intact (or partially intact) £1,920 10% tax band to set against capital gains in excess of the annual exemption.

No changes have been proposed here but we thought that, nevertheless, it is worth stating the current position regarding retirement relief which, following the introduction of taper relief in 1998, is being gradually phased out. The relief ends completely on 5 April 2003.


Corporation tax

The Chancellor announced the following reduction in corporation tax rates effective from 1 April 2002 (i.e. retrospectively). The small companies&#39 rate of corporation tax has been reduced from 20% to 19%, and applies where a company has profits of between £50,001 and £300,000. Where a company&#39s profits do not exceed £10,000 there is a new […]

More than expected: Richard Leeson, Scottish Equitable

IFAs have more to consider than expected from this year&#39s budget. The incentives to small business owners in the form of reduced CGT will generate even more high-net-worth investors as those entrepeneurs sell businesses at or before retirement with consequent inheritance tax liabilities.The announcement of a review of the rules on residence and domicile is […]

AbbeyNat offers free MPPI cover via registered IFAs

IFAs registered with Abbey National can offer clients three months&#39 free mortgage payment protection in a deal with Abbey National Insurance.The deal is available up to June 30 for brokers making applications for a Paymentcare accident, sickness or involuntary unemployment policy starting before December 31.The offer is open to borrowers, including those who already have […]

R&SA slices 20% from term rates

Royal & Sun Alliance UK Life is cutting level term insurance rates by up to 20 per cent.The new rates apply to family, business and keyperson cover under its Lifewise plan. It hopes the rate cuts will consolidate its top-five position in the market and particularly benefit those with highnet-worth sums assured.A male non-smoker aged […]

Stop the cold-calling

Royal London is pleased to support the petition calling for a ban on cold-calling for pension and investment products. The petition, launched by IFA Darren Cooke of Red Circle Financial Planning and hosted on the Parliamentary website, calls on the Government to ban cold-calling for pensions and investment products. A similar ban is already in force […]


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