New tax to hit the unwary?
In his Pre-Budget Report the Chancellor said he would consult on a proposed new income tax charge. LITRG have analysed the outline proposals and believe it could affect many thousands of people on low incomes.
The Revenue published a consultation document in December 2003 asking for views about a new income tax charge aimed at people trying to avoid Inheritance Tax.
LITRG, having picked the bones of the obscurely titled paper on the Revenue website entitled Pre-owned assets , have come to the view that, unless great care is taken, these new provisions could affect many thousands of people on low incomes.
The proposals are aimed at people who give away possessions and who later on receive a benefit through enjoying the use of those pre-owned assets. But this provision, which is aimed to catch the wealthy, might catch the poor. For example, parents might help their children purchase a house, and later on when their health deteriorates might move in to live with the children in that same house. Will this give rise to a charge?
These are only proposals at this stage, but the law could well be rushed through this Spring. It is important that ill-considered provisions do not stop families making arrangements amongst themselves to enable older, vulnerable, family members to live together with them in the community.
LITRG are concerned that these proposals are given a thorough review to ensure that they do not hit people on low incomes. It is also important that they do not add further complexity and uncertainty to an already difficult income tax system.
LITRG have put in a Submission to the Revenue warning of the risks of rushing into this new tax charge and this can be found by following the Relevant link below.
Contact Name: John Andrews (Tel: 0844 579 6700, Fax: 0844 579 6701)
Relevant Link: Submission on pre owned assets