Don´t Lose Out On Tax Changes

January is a busy month, UK tax returns need to arrive at the doors of HMRC before the 31st, and for those of you who have a business here; the annual IVA return (Modelo 390) must be presented to the Hacienda by the 30th

For UK taxpayers things are about to change, and I don’t just mean income tax.  A couple of changes come into force during 2008 which may have an impact on those of you who have properties in the UK.  Fear not though, some of it is good news.

Capital Gains Tax


Some people use the purchase of a property in the UK to generate a pension income from the rental.  In his Pre-Budget report, Alistair Darling has changed the rules and introduced a flat rate for businesses of 18% of capital gains tax (CGT).

For those with a business this news will not be greeted with pleasure.  Businesses were encouraged to hold on to assets for the long term to wipe out any value.  For the majority of us though who have a property on a buy to let basis the future is brighter.   This flat rate means a reduction in liability.  Previously; the best one could hope to achieve was 24% after owning the property for at least ten years.  From April 2008 that will be reduce to 18%.

Of course for those of you who have lived in Spain for a numbers the liability for CGT may be negated altogether. In any event those of you who may be thinking of selling your UK property may be wise to wait until after April 2008.  If however you have a business interest you will probably be better off completing any sale transactions before the April deadline.  The same applies if as a result of any earlier sale in a business you hold corporate bonds or loan note.  If you are locked in to gains you could well see a very large tax bill come redemption time.

In both circumstance it would be wise to speak to your Financial Advisor before committing yourself.

Inheritance Tax


There have also been changes to inheritance tax (IHT) and it is worthwhile mentioning the basic issues should your intention be to hold on to your UK property.  HMRC are most definitely not giving anything away but for the ultimate beneficiaries the new regulations may be useful.  That is; if in the future, governments raise limits in line with value trends.

In essence the nil rate band after which inheritance tax is liable is £300,000.  For couples who are joint owners of a property this nil band rate is applicable to each person.  After the death of the first spouse the remaining partner may intend to keep the property and thus not make use of the first death allowance.  This unused portion can then be added when the remaining spouse dies.   The ultimate beneficiaries then have an allowance of £600,000 before any IHT become payable.

Planning therefore is of the essence to ensure that you have taken full advantage of these changes. It is important that any property or interest you have in the UK is not left out in the cold.  This can happen especially when on a day to day basis everything is running well and your finances are sufficient for your needs.

For most people any review will mean a meeting with your financial advisor who will be aware of all Finance and tax changes.  It should also mean a review of your ‘will’ and more particularly your will as it stands within both UK and Spanish law systems.  There are a number of lawyers who can help you with this.  If you have not done so yet time ticks away and your family could well be in a difficult situation if you have not dealt with your estate in its totality.

Personal Income Tax


I mentioned the change of the date for making a tax return before Christmas but seem to have confused some. 

For UK taxpayers the current year finishes on the 5th April 2008.  The principal change that was introduced in last year’s budget mean that the time you have to present your tax return to HMRC has been reduce by two months.  That means that for the year 6 April 2007 to 5 April 2008 the tax return must be with HMRC by the 30 November 2008 at the latest and NOT 31 January 2009 as in previous years.

You will still able to submit a return up the 30 September if you want the Tax office to do your calculations for you.

For assistance with tax, mortgages, currency transfers and financial information support contact Ann on 661003324, email This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it..


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