We now hear that the Chancellor has ordered an investigation into how much the tax brings into the national coffers. HMRC has been told to report back by January.

This shows us the power of the people (well, a very select group of the people) to get the Government to take action.  Or does it?  The Chancellor has done nothing but buy himself some time here. 

Time to think has to be a good thing, and it is commendable that there hasn’t been another knee jerk reaction of “yes” or “no”.  What is glaringly obvious, to me, is that whilst economists may be in a position to opine as to how measures such as the 50% rate of tax affect the economy, this is only part of the picture.

The other part is politics; and it is the politicians who are responsible for making changes.  The damage which could be done in being seen to favour the rich at a time when unemployment is high and growth is flat lining means that the merits of the 50% rate are of secondary importance to “how it looks”. 

Just listen to the news and take note of how often you hear the phrase “send a message”.  Policy seems to be more about messages sent than the merit of the measure. 

I fully expect that when the Revenue report back on this next year, the results will not show a strong case for the 50% rate.  I’ve helped enough clients to shape their affairs to reduce the impact of the 50% rate to form my own view on the matter. 

Whatever the outcome of this review, my personal opinion of this is that it won’t matter.  It’s the politicians that shape the policy.  Call me cynical if you will, but the bottom line is that any changes made by politicians are going to be based more on politics than economics

This pseudo-tax known as the, Art Resale Levy, (or droit de suite in French) means that sellers will have to pay royalties on works by European artists who have died in the past 70 years, including Pablo Picasso, Henri Matisse and Francis Bacon. Cash is payable to the artist’s heirs each time a work is resold.

The tax already exists in mainland Europe and is due in Britain from January, applying to all works priced above (EURO)1,000 (£900) and on a sliding scale of 0.25 per cent to 4 per cent. 

There will be intellectual property implications of this, if the directive is brought into force in UK.

On the other hand, so the argument goes, why shouldn’t the family reap some of the benefits (in particular when success is mostly posthumous)?

For a more detailed review of the tax’s history and the UK’s derogation until 2012, I suggest an article in the FT, which can be found here (although please note that the FT is subscription only), and for the view of the art lobbyists (LAPADA), click here: LAPADA, and follow the links at the bottom of the page.

There will be scope for planning to avoid this levy if the UK is not be able to extend the derogation beyond 2012, and if you are interested in discussing this with a solicitor, please call 01923 20 20 20 and ask for the Wealth Management Department.

From 6 April 2010, the rule against perpetuities will only apply to those interests set out in the PAA 2009. These are generally trust interests (except pension schemes and inter-charity dispositions). Interests such as easements (legal rights), restrictive covenants (restrictions on use of property), options and pre-emption rights will no longer be subject to the rule against perpetuities.

From my many years of experience, I know that the majority of people we have dealt with do not know what a perpetuity period is (and why should they?) Our property and trust lawyers here often have to explain, and buyers regularly confuse it with a leasehold term of years.

The original rule was intended to prevent certain rights in property being tied up indefinitely and therefore the previous legislation set the maximum period at 80 years, although often the period was less, for example 21 years.

The fact that the perpetuity period is abolished for options could particularly be of use for option agreements, as they will have a longer life span. This could be of assistance to landowners and developers.

For developers doing plot sales, as interests such as easements and restrictive covenants will no longer be subject to the rule against perpetuities, their legal documentation will need amending from April and obviously we at Matthew Arnold & Baldwin LLP will be preparing for this.

For information on how this will affect trusts and accumulations, I will leave this to my expert colleagues!