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UK Budget To Hit The Rich

Friday, March 12, 2010

Wealthy individuals may have less than two weeks to put plans in place to reduce the tax impact of the Chancellor’s pre-election Budget warns PKF Accountants & business advisers.

In his speech on the economy on March 10, Prime Minister Gordon Brown suggested that it will be the better off who have pay to get the country out of recession, and he effectively ruled out spending cuts or tax rises that would hit those on low and middle incomes.

Matt Coward, Director of Private Client Tax Services at PKF says: “Although Gordon Brown and (Chancellor of the Exchequer) Alistair Darling may not always see eye to eye on tax issues, I expect the Chancellor to stick to the traditional Labour Party line with his Budget announcements – financial ‘fairness’ is likely to mean tax rises for the wealthy.”

Coward warns that there could be bad news on both capital gains tax (CGT) and inheritance tax (IHT) as well as yet more moves to restrict tax relief on pension contributions.

 “With the 50% rate of income tax due to take effect from April 6, many are expecting the current rate of CGT – just 18% – to rise to counter tax avoidance by switching investments to generate capital gains instead of income," Coward noted. "A CGT rate as high as 25% or 40% could be announced so realising capital gains before the Budget could be a good idea. However, if the Chancellor takes a more subtle approach, he might phase out the annual CGT exemption for individuals on high incomes or introduce rules to tax gains made over a short period as income. This would make planning options much more complex and bringing forward assets sales could just bring forward your tax bill.”

Widespread negative comment on the Government’s moves to restrict tax relief on pension contributions may spark changes, according to PKF

“The transitional rules up to April 6, 2011 are bad enough, but the proposals for 2011/12 and later years are so complex that people will just turn away from pensions," Coward warns. "However, any move to simplify these rules is only likely to cut tax relief more for those who can afford to make large contributions up to the current GBP245,000 annual allowance.” 

The Chancellor has already frozen the IHT nil rate band for 2010/11 at GBP325,000 and PKF says that more tax raising measures may emerge on March 24.

“Relatively simple rule changes could enable the Chancellor to raise more revenue in the future," Coward observed. "Tightening the rules on gifts could bring more funds into the IHT net and higher rates of tax on larger estates, perhaps a 50% rate on estates of over £5m, could raise significant amounts"

“The long term risk is that, given the need to raise revenue to cut the deficit, any future government may find it hard to reverse such changes once they have been put in place," Coward added, concluding: "Acting now before any such changes take effect may not always be straightforward, but could save you and your family a lot of tax in the long term.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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