In his quieter and more introspective moments, Alistair Darling must wonder if he has the Midas touch in reverse; and if he doesn’t, many others are probably doing it for him.
Fresh from the Revenue’s “clarification” of his proposals for non-doms, which effectively reversed much of what he and they had said previously, the Chancellor now faces criticism from business leaders that his new plans favour non-doms over British-born entrepreneurs.
Under the new proposals, non-doms will be able to elect for a “deemed sale” of their British and overseas assets at 6 April 2008, meaning that they will pay UK capital gains tax only on the growth in value from that date.
In contrast, UK-born entrepreneurs have no such option and will not only lose the benefit of indexation allowance for assets held between 1982 and 1998, but also see the standard rate of capital gains tax on some assets rise by 80%.
We are aware of one example where the post-5 April 2008 tax bill will be nearly four times the liability before, and are sure this will be repeated many times over, sometimes with even more extreme results.
The Chancellor and Revenue are, we understand, adamant that their current proposals will not alter, and in many cases there is, frankly, little that can be done to improve matters.
That does not mean you should not try.
Please contact Cathy Corns or me if you would like to discuss this in more detail.
