Budget 98 - Round-up
Review of UK oil/gas extraction.
The government is to consult the oil industry on elements of the fiscal regime for extraction of UK oil and gas which it considers ‘unsatisfactory’.
Changes may include supplementary corporation tax on oil extracted and a broadening of the Petroleum Revenue Tax (PRT). Oil and gas royalties will be scrapped to help companies exploit older fields, Tariff Receipts Allowance is to be ended and the PRT returns timetable will be made more flexible. A consultative document will be published in mid-April.
Scot ‘hiccup’ in law to be erased.
A quirk of Scottish law that prevents housing associations north of the border claiming back VAT on conversions of commercial property is to be changed. Customs will consider on a case-by-case basis any claims for such VAT reclamation made before the Finance Bill is passed.
VAT threshold rises by #1,000
The threshold for VAT registration will rise by #1,000 to #50,000, and for deregistration by #1,000 to #48,000 from 1 April. The Chancellor will consult on VAT thresholds to consider their effect on competition between registered and non-registered businesses.
Spirits escape duty top-up again
Chancellor Brown mirrored his predecessor in one respect – spirits again escaped an increase in duty. But beer will rise by 1p a pint and wine 4p a bottle from January.
Cigarette duty will rise by the established 5% above inflation or 20p a packet from 1 December. Smuggling and duty fraud are likely to come under increased pressure in the coming months.
Inheritance threshold rises
The threshold for inheritance tax (IHT) will rise #8,000 to #223,000 as of 6 April – in line with the increase in the RPI. IHT is expected to yield #1.9bn from 7,500 estates in 1998/1999.
Firms rush for realignment
Pre-Budget jitters caused a surge in corporate activity, as caution regarding the Labour government’s first major budget persuaded many business owners to realise value from their companies.
Graham Watson, partner at Deloitte & Touche Corporate Finance, said: ‘We have seen a significant increase in the level of corporate realignment activity in the run-up to this year’s Budget.’
Redundancy tax is made ‘fairer’
Taxation on benefits received as part of a redundancy settlement will now be applied only in the years when the benefits are actually taken.
The Revenue says this will make fairer tax calculations for ex-employees under self-assessment for their final year.