Tuesday, 9 October 2007

"Chancellor to signal tax changes"

I shan't hold my breath on IHT changes, but the f***ing piece-of-shit Badger has trotted out more "plans to target private equity bosses' tax loopholes".

Putting Employer's NI to one side (a totally evil tax that ought to be phased out - which only UKIP say they would do) these chaps don't get any tax loopholes!!!

If UK employee makes gain of (say) £100,000 from unapproved share options in a UK company, £40,000 income tax is due. If the employing company complies with the rules in Schedule 23 FA 2003 (which are relatively straightforward), it can claim an equal and opposite corporation tax deduction of 30% of £100,000 = £30,000.

HM Treasury nets £40,000 minus £30,000 = £10,000.

If wicked private equity guy* organises things so that he only pays £10,000 capital gains tax on his £100,000 gain, then the target company (e.g. Boots) gets no tax relief.

HM Treasury nets £10,000.

I struggle to see any fundamental difference between £10,000 and £10,000!
UPDATE - The piece-of-shit Badger has just replaced the 10% rate of CGT with a flat rate 18% on all capital gains In future expect people voluntarily to pay the 40% rate on share gains in unquoted trading companies (i.e. most of those owned by private equity funds - in this case there's no Employer's National Insurance) in order to enable the target 'employer' company to get the 30% rate.
* Sure, if WPEG is offshore, HM Treasury doesn't even get the £10,000 - but lots of UK source income is exempt from UK tax - that is a different topic and easily fixed.