AFTER the difficulties the government has encountered with its reform of capital gains tax (CGT) and the regime for non-domiciled individuals, most commentators were anticipating an unspectacular and largely inoffensive Budget. On that score, the Chancellor has certainly not let us down.
CGT: The new flat rate of 18 per cent has been confirmed, as has the new "entrepreneur's relief", which will result in a tax rate of 10 per cent being applied to the disposal of qualifying business assets up to a maximum lifetime total of £1 million.
This relief was introduced to redress the apparent blunder by the Chancellor when he reduced the headline rate of CGT from 40 to 18 per cent from 6 April, but apparently forgot that this represented an 80 per cent increase in tax for those disposing of businesses.
Revenue powers: Legislation is to be introduced in the Finance Bill to give Her Majesty's Revenue and Customs (HMRC) new powers. HMRC will require taxpayers to supply supplementary information it considers necessary to establish the correct tax position. Third parties will also have to provide information.
A further new power will allow HMRC to inspect records, assets and business premises themselves. This could present an interesting scenario where people have claimed for the use of a room at home as an office. HMRC will have the right to visit the private home on the grounds that at least part of it constitutes "business premises".
Payment of tax: In a society seeing record levels of debt, it is interesting the Chancellor announced legislation that will enable HMRC to introduce a credit card payment "service". If an individual cannot afford to pay their tax any other way, HMRC will collect the outstanding liability by credit card payment.
This step seems rather disingenuous as, apart from adding to the woes of those already in debt, many people will have noticed the rate of interest charged by HMRC on unpaid tax is around 7.5 per cent for the first 30 days with a further 5 per cent surcharge thereafter, compared to credit card interest rates of anywhere up to 30 per cent. It has to be assumed most people will go for the cheaper option.
• Ronnie Ludwig is a partner in the Saffery Champness private wealth group
