Ministers for Tax raising and Tax policy

The Treasury have published a list of headline ministerial responsibilities for key ministers in George Osborne's new team.

On the tax side, the breakdown of roles is a little different from that which applied under the previous regime. The majority of key responsibilities are to be shared by two ministers:

Exchequer Secretary to the Treasury: David Gauke MP

• Strategic oversight of the UK tax system including direct, indirect, business and personal taxation;
• Corporate and small business taxation, with input from the Commercial Secretary;
• Departmental Minister for HM Revenue and Customs and the Valuation Office Agency;
• Lead Minister on European and international tax issues;
• Overall responsibility for the Finance Bill.

Economic Secretary to the Treasury: Justine Greening MP

• Environmental issues including taxation of transport, international Climate Change issues and Energy Issues;
• North Sea oil taxation;
• Tax credits and child poverty and assisting the Chief Secretary on welfare reform;
• Charities and the voluntary sector;
• Excise duties and gambling, including excise fraud and law enforcement;
• Stamp duty land tax;
• EU Budget;
• Ministerial responsibility for the Royal Mint and Departmental Minister for HM Treasury Group;
• Working with the Exchequer Secretary on the Finance Bill.
  

The Financial Secretary to the Treasury, Mark Hoban, will instead focus on financial services, banking, the City and financial markets in the UK and abroad. He will be responsible for the FSA, personal savings and pensions policy, and the aftermath of Equitable Life.

Emergency Budget will be at 12.30pm on Tuesday 22 June

The Chancellor has announced that, what he refers to as, an 'emergency Budget' will be held on Tuesday 22 June.

The Treasury Press Office has since confirmed the Budget statement will be made at 3.30pm** on 22nd June.

I don't remember the last time we were given anything like 5 weeks notice of a Budget date - let alone an 'emergency' one!

** [edited 14 June 2010] MPs are to be asked to agree to an earlier sitting of the House of Commons next Tuesday, so the Budget can be held at the earlier time of 12.30 hrs.

Leader of the Commons Sir George Young has put down a motion that the day's business begins three hours early for a Tuesday, at 11.30 hrs.

This would mean that after an hour of ministerial questions Chancellor George Osborne would deliver his first Budget.

Mr Osborne had been expected to start speaking at 15.30 hrs.

Coalition CGT plans could cause problems for all

Back in March I predicted that the CGT rate will increase to 50% this year. I may be wrong. It may not be until next year.

The Coalition agreement declares the two parties:

"agree to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities".

Annual CGT exemption
The Liberal Democrat manifesto envisaged cutting the personal capital gains tax allowance to £2,000pa. There is no mention of this in the joint statement but reports suggest a reduction in the figure from £10,000 to just £5,000 or maybe £2,500 pa. If it's too low it will cause compliance headaches for anyone selling relatively low value assets who does not currently file an annual self assessment tax return.

Entrepreneurial business activities
Everyone is speculating as to what this phrase might mean:

• Will it cover much the same as the (max £2m) gains that currently qualify for the entrepreneurial CGT rate of 10%?
• Might this relief be extended to cover employee share option and share ownership schemes? This would strike a difference from the previous regime which only favoured entrepreneurs. I think it's optimistic but I agree that there is logic in providing a similar relief to the workers in entrepreneurial businesses.

Non-business capital gains
This would affect second homes, stock market investments and other short-term or speculative gains. What short memories some commentators seem to have. These were taxed at the marginal income tax rate (generally 40%) until 6 April 2008. The rate dropped to 18% only two years ago.

From 6 April 1998 inflationary gains were excluded through a taper relief which also gave a measure of relief for anything other than the most short-term gains. So longer term gains on non-business assets were often only taxed at an effective rate of 24%. It's reasonable to expect the re-introduction of a similar distinction between longer and shorter term gains.

Start date of new regime
Will it take place mid way through the current tax year or only be introduced with effect from 6 April 2011? If I were a betting man I would say the latter. Incidentally if the increase is deferred until 6 April 2011 there would be no additional CGT paid until 31 January 2013.

What are your views on the prospects of changes to the CGT regime?

Will you be able to trust previously non-dom MPs and Lords?

With all the fuss over non-dom peers, it's likely that only inheritance tax advisers have been thinking about excluded property trusts.

As Kevin Slevin explains in his recent article (Parliament: Are they 'Pulling the wool over our eyes' again?) these trusts are very valuable. They have also been a standard tool in the armoury of tax advisers to non-doms for many years. Simply stated, the non dom establishes a non-resident settlement (trust) before their domicile status changes. Typically this would be to limit the impact of the rule that treats a non-dom as domiciled here if they have been resident here for 17 out of the last 20 income tax years of assessment.

All of the offshore assets held in the offshore excluded property trust effectively escape the inheritance tax net. The relevant provisions are contained in s48 IHTA 1984 and were not amended as part of the FA 2008 changes to the tax treatment of non-doms.

There may be good practical reasons for allowing assets held by trusts created by a non-dom to be excluded from IHT. But, as Kevin points out, these provisions, as they stand, allow well-advised MPs and Lords to, effectively circumvent the IHT implications of any rule requiring them to be or to be treated as domiciled here. Can they be trusted not to make such arrangements immediately before choosing to stand for election or before taking their seat in the Lords?

What do you think?

Non Dom MPs, Lords and Inheritance Tax

Remembering back to before the election, there was a lot of fuss about non-dom MPs and members of the House of Lords. The suggestion being that only people who are fully UK resident and domiciled be allowed to sit in the Commons and the Lords.

Like most people I had fallen into the trap of assuming that the normal rules would (or should) apply when considering where MPs and Lords are resident and domiciled.

I am indebted to Kevin Slevin who has identified a much easier solution in an article in Taxation magazine. It warrants (even) wider publicity. Kevin suggests that new provisions be added to relevant tax law to make clear that:

• all elected MPs are treated for all tax purposes as resident in the UK; and
• that anyone also be regarded as domiciled here throughout any income tax year in which they first become or continue to be an elected member of Parliament.

These rules would also apply to anyone who is or becomes entitled to sit in the House of Lords.

Such provisions would be easy to draft and would have no wider implications. Most of all they would also remove any debate as to an individual's current status and any need for discussions as to future intentions.

Kevin's article also touches on a related aspect of the rules of domicile and MPs/Lords. I'll blog about it separately. The full article is here: Parliament: Are they 'Pulling the wool over our eyes' again?