Welcome to the Summer 2008 edition of Tax Break – though ‘summer’ seems a bit of a misnomer given our soggy meteorological experience recently!

We can’t blame Mr Darling for the weather, but in recent months he’s created some fiscal flash-flooding of his own.

His first storm brewed over the abolition of the 10p income tax rate. Ahead of the Crewe by-election, he aimed to calm the choppy political waters by blowing hot and cold. To compensate adversely affected lower earners he upped the 2007/08 personal allowance to £6,035 – then dampened higher earners’ spirits by lowering their basic rate band threshold from £36,000 to £34,800 to balance his books.

The outlook for businesses is changeable, as they weather the new capital allowances and CGT Entrepreneurs’ Relief (see our lead stories). On a sunnier note, the dark legislative clouds that threatened to block tax-efficient dividend payments to spouses have abated for at least a year, while the Government has a rethink.

Non-doms have faced a deluge of complex new rules, but these have gradually been watered down to something that looks less threatening. Click here to read the story.

Enjoy the summer!

Peter Rayney, National Tax Technical Partner, Tax Break Editor enquiries@bdo.co.uk