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All personal clients should by now have received their tax return checklist, let us know if you haven't.

Under the new billing arrangements tax return and accounting information (for the year to 31 March) should be with us by 30 June, if it isn't you risk extra fees.

Let us know if you are going to find it difficult to meet the deadline or if you are unsure about what we need.

Follow the links on the right to our budget report and 2007-08 tax tables or go to to

HMRC's Budget page.

NB: the income tax rates show the updated tax bands and personal relief proposed by the Chancellor in May

Budget report 2008

Tax rates 2008/09

January 2008: Chancellor announces new CGT relief for small businesses

From 6 April 2008 (following the general change to a flat rate 18% for CGT) there will be a 10% rate for small business owners for up to the first £1M of gains.  Follow link opposite to the press release.

Income shifting proposals - December 2007

Following their failure in the Artic Systems case (see below), on 6 December the Government announced the beginning of a consultation period on draft legislation to prevent a tax advantage being gained through income shifting. The consultation period will close on 28 February 2008 and the proposed start date for the legislation is 6 April 2008.

This legislation will have a substantial effect on many of our clients and we strongly suggest that all business clients refer either to the full proposals on the government site link opposite or our extracts and comments PDF (please contact us for the password).

Pre Budget report - October 2007

On 9 October Chancellor Alistair Darling presented his first Pre-Budget Report to the House of Commons. Key factors to note:

For the tax year 2008/09 there will be a single rate of capital gains tax (CGT) set at 18% and a withdrawal of taper relief & indexation allowance.

With effect from second deaths (married couples or civil partners) on or after 9 October 2007 the unused percentage of the inheritance tax nil-rate band from the first death estate can be carried forward and added to the nil-rate band available to the second.

Individuals not domiciled or not ordinarily resident in the UK are currently taxed on overseas income and capital gains only at the time of remittance to the UK. From April 2008 after being resident in the UK for seven years, individuals will have the choice of paying tax on their worldwide income and gains or an annual £30,000.

Following the decision in the Arctic Systems husband-and-wife business tax case, the Government has confirmed that it believes it is unfair for one person to arrange their affairs so that their income is diverted to a second person, usually by dividend, to obtain a tax advantage (income shifting). The vast majority of individuals cannot shift their income and income shifting is considered to run counter to the principle of independent taxation. The Government will be consulting on draft legislation to take effect from 2008/09 to address income shifting. (now released see details above)

Click this link to obtain our full PDF summary of the report (right click to save as).

Our full report

Revenue site

2006 Companies Act changes 1 October 2007

Monday, 1 October 2007 is one of the key implementation dates for the new Companies Act. Among other things, important changes relating to directors' duties, derivative actions and the rules on meetings and shareholder resolutions come into effect.

For more information follow the links opposite to the Institute of Directors website and and booklets on the implications of the changes.

Implications for company directors

Private company summary

New Holiday entitlements 1 October 2007

Annual holiday entitlement is currently 20 days (or pro-rata for part-time employees).  From the above date this increases to 24 days and from 1 April 2009 28 days.

This has been designed to enable employers to catch bank holidays within the basic entitlement but they don't have to, ie bank holidays can still be in addition and may be paid or unpaid.

Note that there are also rules concerning the minimum holidays that must be taken ie they can not be paid in lieu or carried forward.

For further information refer to the Employing People section of the government's Businesslink site and follow the links to Working time and time off.  Business subscribers to our "Tax Enquiry Service" also have access to free employment advice via the dedicated phone helpline.

July 2007 - Artic Systems

At long last the case is over and on 25 July the House of Lords found in favour of the taxpayers.  This brings relief to all husband/wife companies and their practice of making best use of dividend and salary policies.

As always we can expect the Government to look at ways of changing the law to challenge the practice but we will be able to plan for the change rather than having a court case hanging over us for two years.

April 2007: Do you have offshore bank accounts?

HMRC has recently obtained information about holders of offshore accounts from a number of banks and has obtained similar details through the European Savings Directive.

There is nothing wrong with holding an offshore account as long as you pay any tax due on the money deposited in it, and on the interest from it.

HMRC want to encourage those with unpaid tax and duties to pay what they owe. Therefore, they are introducing the Offshore Disclosure Facility to help them get their tax affairs up to date.

This is in the form of an amnesty from full penalties, investigations etc and to take advantage taxpayers have to notify HMRC by 22 June 2007 if they intend to make a disclosure and then make full disclosure by 26 November 2007.

We strongly suggest clients take advantage of this. 

For more information refer to HMRC's Offshore Disclosure Facility.

Follow the links on the right to our budget report and 2007-08 tax tables

2007-08 tax tables

With 2 days notice HMRC notified the change in pence per mile that employers and employees may use to calculate personal or business fuel costs.

After complaint they relented and said that the old rates may be used for a further month if companies find it difficult to change over straight away.  Details of the new rates are on the HMRC site

Please follow this link to Chiltern.'s report summary.

Following the announcement that 2008 tax return filing deadlines were to be brought forward several months (see Budget section below) Lord Carter has given way to intensive lobbying and retained 31 January for electronic returns and has added a month for paper returns, ie to 31 October.

Spring 2006 Budget

Follow the links on the right to our budget report and 2006-07 tax tables.

Amongst all the financial information the chancellor announced that the government had accepted the suggestions of Lord Carter of Coles' Review of HMRC Online Services and, in particular, that from 2008 the deadline for the submission of self assessment tax returns should be brought forward to 30 September (for paper returns) and 30 November (for online returns). (SEE CHANGE ANNOUNCED JULY 2006)

So rather than spoil our Christmas holiday hangovers our Christmas shopping will be disrupted instead.

Other resources:

HMRC's budget website

BBC Budget commentary (with pictures of Gordon!)

Chiltern plc

budget report

2006-07 tax tables

How to pay your self assessment tax bill

Click on the link on the right to the HMRC's website

Artic Systems

January 2006:

In December the Court of Appeal found in favour of the taxpayers in this case ending months of worry and uncertainty over the status of traditional "husband/wife" companies.  However HMRC have announced (on "Friday 13th" January) that they will seek leave to appeal to the House of Lords.

At this stage, and certainly for 2005 tax returns, the law is as dictated by the December decision but clients should be aware that if the decision is reversed returns already submitted may need to be amended leading to increased tax, interest and perhaps penalties.

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