PricewaterhouseCoopers is calling for essential clarification on Pre-Owned Assets, the new tax intended to dam an inheritance tax loophole. (See our story yesterday Inheritance tax 'avoidance' clampdown soon)

Despite recent assurances that the new tax will not target equity release homeowners, more clarification of the rules for pre-owned assets is needed before the legislation comes into force on 5 April this year, says the financial limited liability partnership.

This sticking-plaster income tax charge is designed to stop people avoiding Inheritance Tax by giving away assets they continue to enjoy. Concerns have already been expressed concerns that the tax impacts transactions back to 1986 and that the taxpayer will have to find the cash to pay what could be a hefty tax bill on assets from which they receive no income. Those issues aside, it is still unclear how the rules will work in practice.

There were ministerial announcements over the last two days, which give some basic information, but broad statements do not give the detailed information taxpayers need to be able to calculate their bill, thought it is understood that "draft" guidelines will be issued soon.

Simon Rees, tax senior manager, PricewaterhouseCoopers, asks, "With four weeks before the tax takes effect, is a state of limbo really the right place to be?"

The partnership is also calling for more clarification from the Chancellor on the tax charge on overseas property.

Clarification is needed, says the partnership, on the tax charge on owning a home through a company, particularly overseas, since 2002. At present, taxpayers who have fully funded the purchase of a property, but happen to have used a company, are looking at substantial potential tax bills in a situation where there is simply no income, profit or gain. The Revenue still needs to explain if they intend to pursue these liabilities.

Simon Rees said, "We currently have a number of tax issues where the rules are muddy and in some cases unworkable. We look forward to the budget delivering clarity and certainty in these areas."