Final hour agreement over 2011 tax rates

Since we last wrote to you there have been some developments in the deadlock of 2011 tax rates. On Friday afternoon President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. 

The main highlights are:

• A reintroduction of estate tax but with a $5m exemption available in lifetime or on death ($10m per couple). Surviving spouses can use any unutilized exemption which means for most US couples estate tax will not apply - this will be in force for at least the next 2 years and we expect to see planning opportunities in due course. 
• Gift and estate tax harmonized with a top rate for both of 35%
• Extension to the current income tax and CGT tax rates - also for 2 years

No mention is made of Non US Domiciled individuals and so there is no change to the estate tax difficulties in a mixed domicile marriage. However the annual allowance that a US citizen may gift to a non citizen spouse remains at $136,000 per annum.

For now it seems normal business resumes with at least the knowledge of US tax rates for a couple of years.