TaxSource Total

Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

UK Budget and Finance Bill 2007

The Chancellor of the Exchequer delivered his Budget for 2007 on Wednesday 21 March. The reduction of the corporation tax rate to 28% (from 30%) and the standard rate of income tax to 20% (from 22%) were the key tax measures introduced. Further tax measures are summarised below.

Business Taxation

  • Reduction in the headline corporation tax rate from 30% to 28% from April 2008.
  • Simplification of the capital allowance system, including extension of the 50% rate of first year allowances for small enterprises for a further 12 months; the rate of writing-down allowances for plant and machinery in the general pool will be reduced from 25% to 20%; increase in rate from 6% to 10% for long-life assets; phasing out of industrial buildings allowances.
  • The R&D tax credit for small companies increased from 150% to 175%; and from 125% to 130% for large companies. Both of these measures are subject to EU approval.
  • Increase in the tax rate for small companies from 20% to 22%.

Individual Taxation

  • Increase in personal allowance to £5,225.
  • Increase in CGT annual exemption amount to £9,200.
  • Increase in inheritance tax threshold to £300,000 for 2007-08; £312,000 for 2008-09 and £325,000 for 2009-10

The Environment

  • No stamp duty on zero carbon homes worth up to £500,000.
  • Extension of the reduced rate on biofuels until 2009-10.

Tackling avoidance and fraud

A number of measures were introduced in the following areas: loss-buying; employee benefit trusts; life assurance companies; sale and repurchase agreements; corporate capital gains and losses; tax avoidance involving financial transactions and partnerships and sideways loss relief.

In addition, steps were announced to deal with missing trader intra-community fraud using joint and several liability.

More details on the taxation measures are available at http://www.hmrc.gov.uk/budget2007/master-notes.pdf.

Finance Bill 2007

The Finance Bill 2007 and explanatory memorandum was been published on Thursday 29 March and is available on the HMRC website at http://www.hmrc.gov.uk/finance_bill2007/index.htm.

Prior to the publication of the Finance Bill, HMRC confirmed that changes would be introduced in the Bill relating to Investment Trust Companies investing in certain offshore funds and anti-avoidance measures on financial instruments.