The Pre-Budget Report documentation includes a reference to the scenario where the owner of an asset makes a gift of it to remove it from his/her estate for inheritance tax (IHT) purposes. However if the former owner continues to enjoy the benefits of ownership then the gift is generally ineffective for IHT purposes since the ‘gift with reservation’ rules apply. The government is concerned that the rules can be avoided and is seeking to amend them. No detail is available at this stage. The government has stated that they will introduce legislation in 2004 following consultation.
The Chancellor referred in his speech to giving CASCs 80% rates relief from April 2004. The government also intends to double the thresholds at which CASCs are exempt from corporation tax from £25,000 to £50,000.
The Gift Aid provisions permit donors to receive only very limited benefits back from a charity. Certain heritage and conservation charities have, using a special statutory exemption, introduced free day admission in return for a donation that attracts Gift Aid relief. The government will legislate in 2004 to block this loophole.
The government will consult on the possibility of stamping bottles of spirits in an attempt to tackle organised spirits fraud.