It seems very odd to be writing a without Gordon Brown as Chancellor of the Exchequer; whatever your opinion of his achievements, he was a memorable Chancellor.

One of Napoleon's favourite generals was Marshall Ney - not only because of his military skill but also because he was lucky. You would have to question what Napoleon would have thought of poor old Alistair Darling who has had to cope with the first run on a British bank for 200 years, the fall out of the global credit crunch and the Inland Revenue losing sensitive data for 25 million tax payers - and that's for starters!

Mr Darling's first changes to Capital Gains Tax (CGT) - effective 6th April 2008 - were announced in early October of last year - just after David Cameron's speech to the Conservative Party Conference and whilst Mr Brown was still ruminating on whether or not to call a General Election. In effect these proposals would abolish the favourable 10% CGT rate applicable to business assets and reduce the rate of CGT on non-business assets from a marginal rate of 40% to a single rate of 18%.

In the wake of a huge backlash from the business community, these proposals have just been amended to retain some of the advantages applicable to business asset gains.

Entrepreneurs' Relief
Entrepreneurs' Relief will be available with affect from 6th April 2008 in respect of:-

• Gains made on the disposal of part of a business or

• Gains made on disposals of assets following the cessation of business

• By certain individuals who are involved in running the business.

The first £1M of gains that qualify for relief will be charged to CGT at an effective rate of 10%. Gains in excess of £1M will be charged at the normal 18%. An individual will be able to make claims for relief on more than one occasion, up to a life time total of £1M of gains qualifying for Entrepreneurs' Relief. (We assume - but cannot be certain - that this £1M lifetime clock starts on 6th April 2008 and disregards prior business asset sales).

Conclusion
The rate reduction of 40% to 18% for non business assets (e.g. stock market investments, investment property) is fantastically good news. Mr Darling's new Entrepreneurs' Relief is also welcome. Whether or not you hold capital assets which are business assets or non business assets, if they contain significant unrealised gains, come and talk to us immediately and certainly well before 5th April 2008 - it could be worth your while!

Mr Darling's key proposed change to IHT relates to the "nil rate band" , i.e. the amount that you can pass on to people other than your husband, wife or civil partner, without paying IHT; this tax free amount is currently £300,000. Under the previous IHT rules, if someone dies and leaves their entire estate to their spouse, their nil rate band is "wasted" because when their spouse ultimately dies and passes the combined estate on to the next generation, only the second spouse's nil rate band amount passes tax-free.

The new proposals provide that the amount not used when the first spouse died may be used when the second spouse dies. So in the scenario just outlined, £600,000 and not £300,000 passes on to the next generation tax-free. These changes take effect in relation to all cases where the second spouse dies after 9 October 2007 and without any restriction in relation to the date of the first spouse's death.

Before Mr Darling's changes, the same result could be achieved, as long as wills incorporated a "nil rate band trust"; so in many cases, this is an administrative simplification rather than a tax cut. Nonetheless, we believe that any simplification in inheritance taxation is to be welcomed.

If you have already incorporated a "nil rate band trust" in your will, there is probably no pressing need to rewrite your will since such a trust does not currently have any adverse tax consequences. Nonetheless, when you next review your will, it would be sensible to consider removing any provision for such a trust, if only in the interests of administrative simplicity. As always, do please talk to us when you are reviewing your estate planning needs.

Situations arise where employees prefer to receive "additional pension" rather than taxable bonus. As the rules currently stand, considerable National Insurance (NI) savings are achieved if companies route such contributions directly into the employee's pension scheme; in addition, the amount qualifying for corporation tax relief will not usually be restricted to the employee's earnings in the tax year concerned.

For example, Market Garden Ltd pays £80,000 into a pension scheme it established for its managing director, Algie. The company obtains corporation tax relief @ say 20% = £16,000. This does not usually require the director/employee to have earnings of £80,000.

If the company paid a salary instead and then Algie paid a pension contribution to shelter the income from income tax, the position is as follows:-

• Earnings with same gross cost to employer of £80,000 = £69,760 ( 12.8% thereof is employer's NIC = £10,240 ). Corporation tax relief is £16,000 as before. Earnings of £69,760 attract 1% employee NIC = £697.60.

• Extra cost of earnings route = £10,240 + 697.60 = £10,937.60. Furthermore, only £69,760 can go to the pension scheme instead of £80,000.

It can be seen that substantial NIC savings can be achieved if the employer makes a pension contribution rather than the employee.

Non UK domiciled individuals currently only pay UK income tax on foreign income if this is remitted to the UK. With effect from 5 April 2008, any "non dom" who has been UK resident for more than 7 years, will be faced with two choices:-

• Paying UK tax on world wide income, regardless of whether is it remitted or not.

• Paying an annual levy of £30,000 on top of UK tax payable on remitted income.

The seven year qualifying period runs from the date a "non dom" arrives in the UK, so many "non doms" will go straight into the new system from 5 April 2008. Other "non dom" proposals include changes to the following:-

• Personal allowances are available to residents who are non-domiciled. From 6 April 2008, personal allowances cannot be claimed at the same time as using the remittance basis. There will be a de-minimis limit whereby if the unremitted foreign income is less than £1,000 then personal allowances may still be claimed.

• Day count for residency; HRMC currently does not count days of arrival or departure when measuring the 182 days or 90 days over four years rules for UK residency purposes. From 6 April 2008 this will no longer be the case and days of arrival and departure will be included as days of residency .

• Converting income to capital. The use of off-shore structures to convert taxable income and gains into nontaxable payments is to be prohibited.

Britain's National Criminal Intelligence Service ( NCIS ) was launched in 1992 to "provide leadership and excellence in criminal intelligence". This agency has recently been replaced by the Serious Organised Crime Agency (SOCA). As accountants, we are under an obligation to report any of our clients we think may be handling the proceeds of crime (money laundering). Happily, we must move in the wrong circles because so far we have not had to file any reports.

A comparison of how seriously Britain adheres to European legislation as compared with fellow EC member states makes for rather predictable reading. According to a recent report in the Financial Times, the number of reports submitted in the UK to SOCA and its predecessor NCIS since 1992 is 140,000; German reports number about 2000; France 11; Italy unknown!

The system for getting tax relief on capital investment is changing rapidly on 1 April for companies and 6 April for the self employed.

At the moment, small businesses get a first year allowance of 50% on plant and equipment followed by a writing down allowance (w.d.a) of 25% per annum on the balance.

In April next year, the w.d.a will go down to 20%. There will be an Annual Investment Allowance available to all businesses of up to £50,000. In other words, capital expenditure on plant and equipment will be fully tax deductible in the year of purchase up to £50,000. This £50,000 is being phased in so that , if you make up your accounts to the end of April, you will only get one-twelfth in the first year, to the end of May, two-twelfths and so on.

So farmers, contractors and any other businesses that buy large items of capital equipment may be best advised to delay the purchase of, say , a tractor until April or later. Instead of getting 50% relief immediately, they will get 100% if they time their investment right. If you are in any doubt about how this is going to work, you should contact us.

Cars are to have a regime of their own. This will be based on CO2 emissions. Cars with CO2 emissions up to 120g/km will get a 100% first year allowance. Cars with emissions between 121g/km and 165g/km will get w.d.a of 20%. And cars with emissions exceeding 165g/km will get 10% w.d.a. The concept of an expensive car - which has been stuck at a list price of £12,000 for some years now - is to go. This radical change is best exemplified by the VW Polo Blue Motion. This has CO2 emissions of 99g/km. The tax disc costs nothing. But the 5-door version costs £12,595. Under the present regime, this is an expensive car and the capital allowance is limited to £3,000. Under the new regime, the allowance will be 100% or £12,595.

You may not be aware, but HRMC are tightening up on the penalties for getting it wrong, or even getting it right - but at the wrong time. For instance, failure to submit a benefits return (form P11D) by 6 July following the end of the related fiscal year will technically incur a penalty of £100 per month for each form until the failure is rectified, and Inspectors are now encouraged to press for these penalties. This could be a tidy sum if a number of forms are involved and the returns are considerably overdue.

The penalty regime is, however, set to become even more stringent. The rules have still to be finalised but it is expected they will be introduced for tax return periods commencing after 31 March 2008. It is proposed to introduce a scheme of fixed rate penalties for errors in returns, the penalty being tax geared and the rate dependant on the seriousness of the behaviour of the taxpayer in causing the inaccuracy. The three categories of inaccuracy are:

Careless - 30%
Deliberate but without concealment - 70%
Both deliberate and concealed - 100%

However, these fixed rates can be mitigated through disclosure, prompted or unprompted, the latter of course qualifying for a higher level of mitigation. Note that it is even proposed that failure to report an error in an assessment raised by HMRC itself will incur a fixed penalty of 30%. (Heads I win...................)!

Finally, on a more positive note, it should be noted that an innocent error where there has been a genuine mistake will not be penalised. What is an innocent error? Well that's another story!

Dear Son,

Just a few lines to let you know that I am still alive. I am writing this letter slowly because I know you can't read very fast.

You won't recognise the house anymore when you come home; we have moved.

We have a new washing machine in our new house, but it hasn't been working too good. Last week I put in 14 shirts, pulled the chain and I haven't seen them since!

About your father - he has a lovely new job. He now has 500 people under him. He is cutting the grass at the cemetery.

Your sister, Mary, had a baby this morning. I haven't found out yet whether it was a boy or a girl, so I don't know if you are an Uncle or an Aunt.

Your Uncle Dick drowned last week in a vat of whiskey in Dublin Brewery. Some of his co-workers dived in to save him, but he fought them off bravely. We cremated the body and it took three days to put out the fire.

I went to the doctor on Thursday, and your father came with me. The doctor put a small tube in my mouth and told me not to open it for ten minutes - your father offered to buy it from him.

The weather isn't bad here. It only rained twice last week. The first time was for three days and the second for four. On Monday the wind blew so hard that one of the chickens laid the same egg four times.

We had a letter from the undertaker. He said that if the last payment on your Grandma's plot isn't paid, up she comes.

I am sorry I haven't got more news for you son.

Your loving Mother,

PS. I was going to send you five pounds, but I have already sealed the envelope.

• The Fasting and Prayer conference includes meals.

• Ladies, don't forget the rummage sale. It's a chance to get rid of those things not worth keeping around the house. Bring your husbands.

Miss Charlene Mason sang "I will not pass this way again" giving obvious pleasure to the congregation.

• Irving Benson and Jessie Carter were married on 24 October in the church. So ends a friendship that began in their school days.

• Scouts are saving aluminium cans, bottles and other items to be recycled. Proceeds will be used to cripple children.

• This evening at 7pm there will be a hymn singing in the park across from the Church. Bring a blanket and come prepared to sin.

• Low Self Esteem Support Group will meet Thursday at 7pm. Please use the back door.

• Weight Watchers will meet at 7pm at the First Presbyterian Church. Please use large double door at the side entrance.