NEWS
French Presentation on Pre-nuptial agreements by Lynn Wallis - Managing Partner
May 2009
How the English courts view Pre-nuptial agreements (French translation) (1.66MB)
How the English courts view Pre-nuptial agreements (English) (86KB)
Companies in Financial Difficulty - A Guide for Directors
January 2009
The effects of the global economic crisis are
being felt by almost all commercial
businesses, but a company may find itself in
financial difficulty for any number of reasons.
A company’s trading activities may have
been following a reducing trend for some
time or it may find itself in difficulty almost overnight, perhaps because of the loss of a
significant customer or supplier.. . .
Companies in Financial Difficulty (167KB)
Article: South East Regional Focus
Source:
Corporate UK Magazine
October 2008
The South East of England is one of the most successful economic regions in Europe.
It has the highest employment rate in the UK at 79.6%, the second highest
GVA per head and the second highest household income per head, according to
figures from SEEDA and the UK government. . .
South East Regional Focus (376KB)
Deal Review: Pye Properties and Bennett Property
Source: ACQ Magazine
September 2008
Pye makes offer for Bennet . . .
Deal Review: Pye Properties and Bennett Property (216KB)
Deal Review: South Essex Insurance Brokers & Ecclesiastical
Source:
ACQ Magazine
May 2008
Ecclesiastical acquires brokerage businesses . . .
Deal Review: South Essex Insurance Brokers & Ecclesiastical (192KB)
Article: Exclusions of Liability – A Cautionary Note
Source: Newbury Business News
May 2008
Care needs to be taken when considering an exclusion of liability clause in standard terms of business. Suppliers of services often attempt to exclude a wide range of potential losses in their standard terms of business. However, draft this too widely and you may be left with nothing at all to rely on . . .
Exclusions of Liability – A Cautionary Note
MBO: The Lawyer's Perspective
Source: 'Corporate UK'
March 2008 pages 28-31
The legal adviser’s role is integral to the
successful completion of an MBO. Smoothly
guiding management through the complex
and pressurised process is a diplomatic as
well as legal exercise. Nick Johnstone spoke
to a number of experienced legal advisers
for a rundown on the issues confronted in
an MBO. . .
MBO: The Lawyer's Perspective (456KB)
Capital Gains Tax Reform – 6th April 2008
Capital Gains Tax (CGT) is based upon the gain (effectively the profit) that you make when you dispose of an asset. On a sale the gain is based upon the profit that you make from the sale proceeds. When making a gift, CGT is assessed on the gain that you are “deemed” to make when you dispose of an asset so that the amount of CGT is assessed on the market value of the asset at the date of the gift.
As a basic rule of thumb, the gain can be calculated by taking the amount received on a sale, and subtracting the costs of making the sale, the original cost of the asset, any further expenditure improving the asset concerned, an allowance for the length of time it has been yours, and a final reduction of your available annual allowance.
Assets for CGT purposes include all forms of property. “Property” means something that is capable of being owned in the legal sense, such as a house, shares, etc. but also includes non-tangible property, such as goodwill, options, and currency other than sterling. Debts, cars, collections of things and many of the more unusual forms of property have special rules.
The Old Rules – only available to 5th April 2008
Rate of CGT – treated as the “top slice” of your income tax liability: 10%, 20% or 40%.
Annual exemption – tax year 07/08 is £9,200 for an individual or £4,600 for a trust.
Rebasing – Assets owned before 1982 can have the gain calculated on either the initial value of the asset or the 1982 value, whichever proves the “better value” for the CGT calculation.
Share Identification Rules – matching the gain to the dates of when the shares were obtained to keep the gains consistent to the period of ownership.
Indexation Allowance – reduces the gain for assets owned before 6th April 1998.
Taper Relief – reduces the gain for assets owned on or after 6th April 1998.
Business Assets – after 2 years ownership then effective rate of CGT of 10% for higher rate tax payers (25% of the gain for lower rate tax payers).
Non-business Assets – after 10 years ownership then only pay 40% of the “gain”.
Some assets qualify for both Indexation Allowance and Taper Relief, depending upon how long the assets have been owned.
The New Rules – only available from 6th April 2008
Rate of CGT – Flat rate of 18% for individuals and trusts.
Entrepreneur’s Relief – first £1Million of gain (total of accumulated gain over a lifetime) at 10% but gain above the £1Million at 18% - BUSINESS ASSETS ONLY
Old Rules VS New Rules
Business Asset Taper Relief under the Old Rules is far more generous than the Entrepreneur’s Relief for business assets. It is unlimited, gives an affective rate of 10% after only 2 years and gives a more generous interpretation of a business asset.
Indexation Allowance under the Old Rules substantially reduces the value of an asset provided the asset was owned as at 5th April 1998.
Hold over relief will be available under the New Rules, but only if the relief relates to a gift.
“Top Slicing” means the Old Rules rely on the rate of your individual income tax to set the rate of CGT payable – 10%, 20% or 40%.
Flat Rate of 18% under the New Rules is far simpler and predominantly better for those not expecting to hold on to assets for long periods of time.
Trusts making disposals under the New Rules will only pay 18% CGT regardless as to how long they have owned an asset, compared to 40% under the Old Rules.
How do I trigger the Old Rules?
Sell your asset
You are governed by the tax and not necessarily the market and you must pay the CGT on the gain that you make by 31st January 2009.
Gifts
Trusts - make a gift of all or part of an asset and hold over the CGT until the Trust disposes of the asset. The Trust will pay the gain at the new rate of 18% when the trust comes to dispose of the asset. This defers the gain.
Individuals – make a gift of all or part of an asset but you must pay the CGT on the “deemed” market value of the asset by 31st January 2009.
Option Agreement
Reduce your rights over an asset (usually land) and this could be treated as a disposal for CGT purposes under the Old Rules. You must pay the CGT but rebase the value of the asset (the land) to the date of the option agreement. This is “uplift” in the value of the asset which will reduce the CGT to 18% on the eventual disposal assuming the disposal is made under the New Rules.
Specific Assets
Business Assets – such as shares
Take advantage of 10% rate of tax on ALL business asset gains with no limit on the value of the gain that can be made. If you own an asset that qualifies under the current Business Asset Taper Relief rules you could “trigger” the gain of using the old rules as above.
Land Assets – development land or a property portfolio
If you have owned land for a number of years then Old Rules may give a greater reduction in the gain that you make either on a sale or on a gift. The use of a trust could “trigger” the gain under the Old Rules as well as ensure that when the trust comes to sell or dispose of the asset, the Trust will only pay 18% under the New Rules.
If you would like advice on a comparison of the Old Rules and the New Rules for disposal of assets or how option agreements or trusts can assist you, please contact Trudy Rogers in our Tax and Succession Department. Alternatively contact a member of the team that is relevant to your particular type of asset: Julian Parkes in our Commercial Property Department; Guy Horsey in our Residential Conveyancing Department or Nick Cockcroft in our Business Services Group.
To book an appointment, please call: +44 (0)20 7222
8844 (London)
or
+44 (0)1635 580858 (Newbury).
