Alistair Darling has released his first budget on the world (or should we just say Britain) and it has ended up being a rather dull affair. There is plenty of detail behind the budget, but we already knew what the major changes were going to be because he told us last Autumn.
Despite a great deal of lobbying he has decided to introduce “fat cat” taxes to Britain. “Non-doms” will now have to pay £30,000 for the privilege of keeping their world wide assets a secret from the UK tax authorities. For substantially wealthy people living in the UK with a large fortune abroad, this may be a small price to pay. The legislation is not going to bestraight forward - (but then the existing legislation is not that easy either).
His other main fat cat tax is to charge all capital gains at 18%. This appears to have been aimed at those successful entrepreneurs who managed to buy or set up a business and then sell it on within a few years at a substantial profit. For those less successful entrepreneurs (and that means those whose gains are less than £1m) the previous tax rate of 10% still remains.
To achieve this tax on entrepreneurs, Alistair Darling has completely rewritten the capital gains tax rules which means that there will be both winners and losers.
The winners are those who would otherwise have paid capital gains tax at 40% and will now pay it at the new flat rate 18%. The losers will be those who would have paid tax at a lower rate because they did not have sufficient other income and also those who have owned assets for a substantial period of time who will lose out on the inflation reliefs (indexation and taper relief) which are being abolished from 6 April.
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