News - Dec 2005 - Pre-Budget report

SIPP restrictions already - see below. It would seem the rush to acquire residential property in pension funds may have been defeated before it began. Not really a surprise but a blow to a number of you. Undoubtedly an even bigger blow to SIPP providers!

Development Land Tax again (some of me remembers it from some years ago - it was a nightmare then!) Now called a Planning Gain Supplement I have a 60 page booklet I can email if you are very interested. However the main point at this stage is that it is a discussion document and the proposed introduction date is 2008.

The 0% rate of Corporation Tax has now been scrapped - although first year allowance on plant expenditure is being increased to 50%. This will increase corporation tax liabilities for companies with taxable profits less than £50,000.

Child tax credit change welcome - if your income is less than £50k and you have children are you receiving it? If so less chance of repayments by income changes in future - a first thought, if you can control your income may be to have a very low year then a high one might generate some useful tax credits - doubtless anti avoidance provisions might prevent this. The change applies for 2006/07 income compared to 2005/06 so not of immediate impact.

Haulage industry comment relevant to a number of you in transport.

National Sports foundation reference included because of my interest here. Perhaps I should aim to be one of the new coaches? Ok I am too old !

Quotes from the documents:-

Self Invested Personal Pensions (SIPPs) and all other forms of self-directed
pensions will be prohibited from obtaining tax advantages when investing in
residential property and certain other assets, such as fine wines, from 6 April
2006. This action will ensure that tax relief is only given to those whose
purpose in making the contribution is to provide themselves with a secure
retirement income; and
- action will also be taken to prevent abuse of the rules for tax-free lump sums
from 6 April 2006. The legislation will remove tax advantages where lump
sums are recycled back into funds in order to generate artificial levels of tax
relief.
To encourage investment in a range of assets as part of pensions saving, the
Government is minded to allow SIPPS to invest in genuinely diverse commercial
vehicles that hold residential property, such as the proposed Real Estate Investment
Trust model (detailed in PN04). Action will be taken if it becomes apparent that
people are trying to use collective vehicles to get around the rules for prohibited
assets. HMRC has today published detailed technical guidance on the prohibition.

Haulage industry: the Government welcomes the report of Burns inquiry into the
impact of fuel duty and competition from overseas on the UK haulage industry. It
recognises that there are also a number of other important challenges facing the
haulage industry and is therefore inviting key industry associations to participate in a
joint task group to place the findings of the inquiry in this broader context. The task
group will also assess how the pressures identified by the Burns inquiry compare
with those facing other sectors which are open to international competition or have
experienced rising input costs.

National Sports Foundation
- Fit for Sport – projects to improve both physical and human infrastructure for
community clubs. This programme will aim to provide up to ten new multipurpose
pitches over the next five years and an extra 50 new sports coaches
for the under 15s by 2008;
- 2012 Kids – building on the success of the Olympics, projects to encourage
children to take up sport, particularly in schools;