by The Investor
on April 11, 2008
This is the last in my series on changes to UK taxation.
Gains on AIM shares now taxed at 18%
This is more a sting in the tail of the changes to the Capital Gains Tax (CGT) regime we looked at earlier in the week than a wholly new rule.
AIM shares are listed on the Alternative Investment Market. Since most AIM shares were classed as business assets, it used to be possible to pay less Capital Gains tax on gains, provided you held the shares for two years to qualify for the 10% business assets tax rate.
Now all Capital Gains (bar the first £1million that qualify under the special Entrepreneur’s Relief scheme) are taxed at a flat 18%, AIM shares no longer have any special CGT advantage over FTSE 100 shares.
Make a £100 gain on any shares outside of your personal CGT allowance , and you’ll pay 18% tax, whatever the shares you sell. Hardly a way of encouraging money to flow to the riskier start-up businesses that tend to predominate on AIM, but then that hasn’t been on the agenda for a few years now.
AIM shares still have an inheritance tax perk
It is still possible to use AIM shares to reduce inheritance tax. But with the inheritance tax threshold having risen to £600,000 for couples, the number of people who will benefit from doing so won’t be great, especially as most UK wealth is tied up in housing; you can hardly live in a portfolio of AIM shares before you pop your clogs.
Everything you could want to know about UK tax (and much, MUCH more) is available on the Government’s official tax pages. Why not instead subscribe to Monevator to keep cutting to the chase?
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by The Investor
on April 10, 2008
This post is one of a series on the changes to the UK personal tax regime introduced in the 2008/09 financial year.
All Capital Gains Tax charged at 18%
We all have a personal allowance, currently £9,600 (and distinct from your personal income tax allowance) before Capital Gains Tax is due. You are also allowed to dispose of personal goods of up to £6,000 every year, and generally your main home is free of Capital Gains tax as well.
After that, you’ll be charged on gains at 18%.
Rarely has a new law seemed so sensible, yet so widely derided by the press and public, as the rushed implementation of this flat Capital Gains Tax (CGT) regime.
The idea of a single, flat rate of CGT has much to commend it. Having a hodge podge of rates for AIM shares, business assets, and investments held for different periods of time was a pain in the posterior neck.
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by The Investor
on April 9, 2008
Just when peer-to-peer bank Zopa was getting interesting again thanks to higher rates, it’s somewhat annoyingly announced plans to limit the kinds of loans you can make with your savings.
The new regime will see one, two and four-year loan terms scrapped, with only 36 or 60 month loans being offered to borrowers. This means you can no longer lock away your money as a lender for just a year or two in the normal market, although the ‘listings’ market, where you deal with individuals, will still offer the old flexibility.
Zopa claims the move will streamline the business for both lenders and borrowers. It believes too many lenders are put off by all the different fiddly options, and argues that the 36 and 60 month terms make for more attractive lending.
I’m uncomfortable however with the idea of locking myself into such a novel business model for three years or more, so I’ll probably not increase my Zopa lending as planned, at least not until these changes are digested by the Zopa community.
The full message from Zopa is as follows:
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by The Investor
on April 9, 2008
This is the third article in a series on the key UK personal tax changes from April 2008. For the others, please see the introduction.
Basic rate of income tax has been cut to 20%
At last, something to cheer about! The world economy is in turmoil, banks are going belly up, and stock markets are falling, but at least this year will see most UK employees paying less income tax. The exceptions are lower-paid workers who are more affected by the scrapping of the 10% tax band we covered yesterday than by any gain from the cut in basic rate tax.
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