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Residence and domicile

The government will implement the package of reforms announced at the 2007 Pre-Budget Report subject to some changes made following consultation.

These key changes mean:

• income and gains in offshore trusts will only be taxed when they are remitted to the UK, even if these come from UK assets
• children will not pay the £30,000 charge
• the £30,000 charge should be creditable against foreign tax
• art works brought into the UK for public display or for repair and restoration will face no new tax charges;
  where art works owned by offshore trusts are sold in the UK tax will only be paid when the trust remits the gain to the UK
• people with unremitted offshore income and gains of under £2,000 are exempt from the £30,000 charge and the changes to personal allowances.

The Budget announces that the rules in this area will not be substantially revisited for the rest of this or the next Parliament.

Tax simplification

Following discussions with business and tax professionals, the government announced the initial outcomes on the three tax simplification reviews launched at the 2007 Pre-Budget Report:

• VAT rules and administration: consulting on ideas to simplify operation of the partial exemption regime and capital goods scheme, and exploring the continuing need for business to seek permission from HMRC before taxing otherwise VAT–exempt supplies of land and property
• anti-avoidance legislation: repealing outdated and complex anti-avoidance provisions on bond washing, employment securities and other transactions in securities
• corporation Tax rules for related companies: simplifying the associated companies rules relating to the small companies rate of Corporation Tax.

The government also announced over 20 further tax simplification measures, which will help sectors across the UK economy, including further modernising the tax system for financial services and the charitable sector.

Islamic finance

The Budget announced a package of measures to further support Islamic finance in the UK. The Government aims, subject to consultation, to provide relief from stamp duty land tax (SDLT) for alternative finance investment bonds. The government will also amend legislation to treat these instruments as loan capital for stamp duty and stamp duty reserve tax purposes, and modify legislation that will allow corporation and income tax rules on these instruments to be amended in the future by regulations, should that prove necessary.