Tax Services News

UK Residence and Day Counting

From 6 April 2008, any day where an individual is present in the UK at midnight will be counted for the purpose of testing residency. An exception will be provided for transit passengers provided they do not engage in activities substantially unrelated to their travel. Days of departure continue to be excluded.

CGT – A New Regime

The new simplified CGT regime commenced on 6 April 2008 and the changes that have taken place include:

  • Introduction of a new flat rate of capital gains tax of 18%;
  • Abolition of indexation allowance;
  • Abolition of taper relief;
  • Abolition of the “kink test”, meaning that assets held on 31 March 1982 will be given a base cost equivalent to their market value on that date, regardless of the actual price paid;
  • Simplification of the matching rules for shares and securities.

Entrepreneurs Relief

The first £1 million of gains on certain types of assets will be charged to CGT at an effective rate of 10 per cent from 6 April 2008. An individual will be able to make claims for this relief on more than one occasion, with the £1 million being a lifetime total. Gains in excess of £1 million will be charged at the new standard 18 per cent rate.

Broadly speaking the following types of gains will qualify for the relief, provided the assets have been held for at least one year:

  • Disposals of the whole or part of a trading business (not including a property letting business other than furnished holiday lettings) that is carried on by the individual, either alone or in partnership.
  • Disposals of shares (and securities) in a trading company provided that the individual making the disposal has been an employee, director or officer of the company and owns at least 5 per cent of the ordinary share capital of the company and that holding enables the individual to exercise at least 5 per cent of the voting rights in that company.

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