Press Release

Pre-Budget Report – ACCA responds

9 October 2007

ACCA (the Association of Chartered Certified Accountants) today broadly welcomed the Chancellor’s Pre Budget Report (PBR).

Chas Roy-Chowdhury, Head of Taxation at ACCA, said: “We welcome the announcement about Inheritance Tax from the Chancellor, but we need to see further the detail about his plans. But we are concerned about the withdrawal of the indexation allowance for CGT purposes, which may have a significant adverse effect on many businesses and entrepreneurs.”

“The Chancellor’s three clear principles for the tax system to be ‘competitive, simple and fair’ are supported by ACCA. But clarity in the system is also needed, and the ACCA’s suggested way of doing this is to establish a Tax Policy Committee (TPC), similar in lines to the Monetary Policy Committee (MPC).

We are also calling for a single Budget per Parliament, which would remove some of the complexity of the budget planning process.”

Chas Roy-Chowdhury offers the following comments on specific measures outlined in the PBR speech:

• Inheritance Tax: ACCA has long called for transferability between married couples and the announcement today is genuinely good news. From today, combined allowances increase from £300,000 to £600,000. ACCA supports the fairness of providing the benefit of the transferable allowances to previous widowers, although this could prove an administrative headache to implement.
• Non domiciles – The Chancellor is mindful to create a careful balancing act to make the tax system “fair, workable and affordable” with regards to non domiciles. ACCA wants to see an appropriate balance between a fair and clear level of taxation for those individuals, while not deterring them from working in the UK.
• Capital Gains Tax reform – The reforms need to take into account inflationary relief, especially for assets. As they stand, the reforms will have a significant adverse impact on individuals who are holding assets going back to the 1970s and 1980s during the high inflationary era.
• Private equity – Our concern here is that the planned consultation should come to the appropriate conclusion, which must not deter investment in UK plc, while ensuring fairness and simplicity.