The Chancellor’s 2006 Budget may seem like a distant memory as you begin to plan your summer holidays! Although it was not a particularly headline grabbing Budget some important changes and proposals were announced.Amongst these was the date of withdrawal of the 0% starting rate of corporation tax, first announced in the Pre-Budget Report. The 0% rate was introduced in 2002 and applied to companies with taxable profits of £10,000 or less.
The attractiveness of this tax free band tempted many unincorporated businesses to incorporate, although this was somewhat tempered by the subsequent introduction of a ‘non-corporate distribution rate’ of 19% to the extent that company profits were distributed. The removal of the 0% rate took place with effect from 1 April 2006. It was replaced by a rate of 19% on profits up to £300,000.
You will find a brief summary of other important Budget news inside.
To the disappointment of many, one issue that the Chancellor did not make any ‘good news’ announcements on was inheritance tax (IHT). It is estimated that the government will collect approximately £3.5bn in IHT this year alone! It is a tax that is affecting an increasing number of people and inside we have included an article considering some of the tax planning opportunities that still exist.