From 6th April 2006 there were major changes in the world of UK pensions. The changes have consistently been trumpeted as ‘simplification’ by the Treasury but, as seems to have become the norm in recent times, the new rules seem to have nearly as many complications as the old ones! Make sure you have been in contact with your pensions advisers to find out what effect the changes have on you and your future. There is a time limit on some of the choices that have to be made, and leaving it too long can result in unexpected (and substantial) tax bills. A new form of Return is being issued to schemes in respect of year ended 5th April 2007 and it is understood that every scheme which is required to complete one will have to do so for the tax year - and cannot use its accounts to another date as a basis for the Return. The only exceptions currently to this are schemes which have audited accounts which may use the accounting date. This special Return is for the Scheme Administrator to complete and is NOT a self-assessment Tax Return. So it is possible that some schemes may receive both the new Return and the normal kind of self-assessment Tax Return as well!

This new tax, which is levied on people who have given away assets (sometimes as long ago as 1976) but continue in some way to enjoy the use of those assets, was first reportable in 2006 Tax Returns. This tax is hedged around with complex rules in an effort to stop what is perceived by the Treasury to be ‘tax avoidance’ and there are some completely innocent situations which, sadly, are still caught. It is worth having any situation which you feel is worrying carefully reviewed to check there are no issues for you. It is too early in the life of this new tax for there to be any precedent case law, so it is not yet apparent how light a touch, or otherwise, H M Revenue and Customs will operate.

With effect from 1st April 2007 the Corporation Tax rate for small companies rises to 20% following the recent Budget. Remember, there is now be no nil rate band for Corporation Tax at all, ths having been abolished in the 2006 Budget at which time the complex rules, introduced as a ‘knee-jerk’ reaction to counter the strategy of paying dividends out of nil rate taxed company income, have become obsolete. It is ironic indeed that we have moved in two years from a position where 'the lowest Corporation Tax rate anywhere in the world' could be trumpeted during the Budget, to one with an increasing rate, resulting a growing burden on small businesses.

As from 2006/07 any increase in income of less than £25,000 in any given year has no effect on the claim for the following year. It is hoped this will simplify the claims procedure significantly.

The introduction of the new CIS, originally put off from April 2006, has been in place now since 6th April 2007. The new scheme requires, among other things, contractors to provide monthly declarations that their workers are correctly classified as employed or self-employed. H M Revenue and Customs have provided a piece of interactive software online to 'assist' with classification. However, this may well not be flexible enough in any particular case, and each individual worker must be considered on their merits. We have already seen cases where the software has given completely the wrong result! A new version of this employment status tool is at www.hmrc.gov.uk/calcs/esi.htm.

It is no longer possible to pay your tax at a tax office. You will need to pay either electronically, or at a bank, or by post. Tax offices are no longer allowed to receive payments.