A combination of proposals made in this year's and last year's 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's 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's 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 - dot.com or otherwise.
For perhaps too many in the financial services industry, however, "employee benefits" 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
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.