TAX CHANGES AFOOT

The dust is still slowly settling on important new changes to the tax system as the
government consults, legislates and tinkers with the rules but there may still be time to
implement planning to save you potentially tens or even hundred of thousands of pounds.

The new changes to apply from 6 April 2008 are briefly summarised as follows

CAPITAL GAINS TAX (CGT)

• Reduction in rate of CGT from marginal rate of income tax typically 40% to 18%.
• Abolition of Taper Relief which reduced the gain by 75% to an effective tax rate
of 10% after two years for business assets. The gain tapered at 4% per annum for
non business assets (up to a maximum of 40% after ten years).
• Abolition of Indexation – the allowance given for increase in value of an asset for
inflation based on the Retail Price Index.
• Introduction of new Entrepreneurs Relief to replace Business Asset Taper Relief
with a Lifetime rate band of 10% on the first £1m of gains on business assets after
which the standard CGT rate of 18% applies.

DOMICILE AND RESIDENCE

• Days of arrival and departure will now count towards the days resident in the UK
meaning it will be far more difficult to be non UK resident in a particular tax year.
• For those who have been tax resident in the UK for more than seven out of the
last ten years a deemed domicile rule will apply for those for whom until now
have been able to shelter their income and gains offshore tax free.
• The alternative available realistically only for the Super Rich is to pay a flat
£30,000 levy that will mean the remittance basis can still apply.
• Anyone already holding overseas companies or trusts is strongly advised to seek
advice on the effect of the changes on their circumstances.

We have identified some strategies involving mainly trusts and companies that can help
you shelter your assets from the effects of the new rules. There are also ways indexation
and other reliefs can effectively be banked before the new changes take effect.

We are pleased to offer a half day meeting reviewing your affairs for £X + VAT. We are
so confident we can identify savings that we are able to offer a money back guarantee
that if we do not save you at least five times the fee we will refund the fee. As a starting
point please prepare a rough statement of your assets to enable us to review your
potential tax exposures under the new law.

With time running out please contact me before 29 February to discuss matters further.

Prepared by Andrew Cazalet of Lido Tax Consulting, Ealing Studios, Ealing Green London W5 5EP – 079415 80062 or
020 8584 5319 lidotax@gmail.com www.lidotax.co.uk