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Tax changes prompt new business opportunities

A combination of proposals made in this year&#39s and last year&#39s Budget speeches which will come into effect on April 6 give advisers a tremendous opportunity to communicate with business clients and, where appropriate, other professional advisers.

Of the changes in this year&#39s Budget, the new reduced taper relief for business assets and the new share scheme provision grabbed the highlights.

The effective rate of capital gains tax payable by a higher-rate taxpayer will be 35 per cent after one year&#39s ownership, 30 per cent after two years, 20 per cent after three years and 10 per cent after four years.

Ownership periods will be measured from April 6, 1998 but no bonus year will be available.

There is also an important relaxation which will allow all employees to benefit from the new relief, regardless of the size of shareholding and whether the company is quoted or unquoted. For non-employee shareholders, the shareholding to qualify for taper relief is reduced from 25 per cent to 5 per cent. These relaxations, combined with the new anti-avoidance provision aimed at offshore trusts, may make com- plex CGT avoidance plans less attractive to and less necessary for UK resident business owners &#45 or otherwise.

For perhaps too many in the financial services industry, however, &#34employee benefits&#34 has simply meant pensions.

However, anyone serious about this area of business will need to look a little wider than this. The rules for the company share option plan and the approved profit-sharing scheme stay as they are (the latter

until 2002).

The proposed new all- employee share plan rules are well worth studying, incorporating free shares and tax-relieved share purchase.

Other changes to the tax landscape affecting businesses taking effect from April 6, 2000 include the 10 per cent rate of corporation tax for profits up to £10,000, the new personal service company provisions and the abolition of mortgage interest relief which could open up opportunities for some business owners with outstanding credit balance loan accounts to secure interest relief on business loans.


National Insurance

In this Budget the cut in the employer&#39s NI rate from 12.2% to 11.9% from April 2001, announced in the November 1999 Pre-Budget Report, has been confirmed. A further reduction of 0.1% to 11.8% from April 2002 has been proposed.In the last Budget the Chancellor announced substantial changes to National Insurance to take effect from […]

Enterprise Management Incentives

As “trailed” in November&#39s pre-Budget report the Government will be introducing a new Enterprise Management Incentives scheme in the next Finance Bill. These schemes, (EMIs), will encourage key employees to join small higher risk companies by offering access to a tax-advantaged share option scheme. Under the scheme independent trading companies with gross assets not exceeding […]

Money launderers drawn to London

The Serious Fraud Office says that the London banking system is a magnet for money launderers, and banks are not doing enough to stop them.The SFO has 85 cases under investigation or prosecution, the largest number in its 12 years of existence.It says that most banks do not want to report fraud as it shows […]

Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]


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