Personal Tax
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As expected the basic rate of tax will from 6 April 2008 be reduced from 22% to 20%. The cost of this change is largely paid for by the removal of the 10% band for employment income and the increase in the upper earnings limit for NIC. The higher rate threshold has been increased in line with RPI to £36,000.
The reform of Capital Gains Tax announced at the time of the October 2007 Pre Budget Report is to be introduced unchanged. For disposals after 5 April 2008 there will be a flat rate of 18% subject to the new Entrepreneurs Relief which taxes the first £1m of capital gains at an effective rate of 10%.
As previously announced, legislation in the Finance Bill 2008 will extend the non-payable tax credit of one ninth of the distribution to individuals in receipt of overseas dividends where they own less than a 10% shareholding in the distributing non-UK resident company. The previously announced condition that in total an individual must receive less than £5,000 of overseas dividends a year will not be introduced.
On the non-UK domicile proposals there are some useful amendments to the wide ranging legislation which still remains very much more tightly drawn than the present rules. Subject to the £30,000 levy for longer term resident it will be possible for non-UK domiciliaries to remain on the remittance basis if a claim is made.© 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
The Budget proposals and other tax changes are summarised on these pages. The proposals may, however, be amended significantly before enactment. The content of this communication is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining liability to tax or determining investment strategy in specific circumstances. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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