‘Autumn statement 2013’

Autumn Statement 2013 – Summary

Monday, December 9th, 2013

Here’s our summary of the key announcements from last week’s Autumn Statemement..

Autumn Statement 2013 – Corporate Tax Measures

Thursday, December 5th, 2013

Always a meaty area for the Chancellor, here are some of the key measures announced today.

Employers National Insurance Contributions (NIC)  – Employer NIC will be abolished for businesses employing under 21s from April 2015. This exemption applies to those earning below the upper earnings limit which will rise to £42,285 a year (£813 per week).

Employee Ownership –  The Conservative Party Conference in October 2012 announced measures to encourage employee share ownership via the ‘Rights for Shares’. Further measures are now announced to encourage and promote indirect employee share ownership. From April 2014 two new reliefs will be made allowing CGT to be relieved on a controlling interest held by an employee ownership trust and IHT relief on the transfer of shares and other assets to employee ownership trusts.

In further measures, from October 2014 bonus payments made to employees of indirectly employee-owned companies which are controlled by an employee ownership trust will be exempt from income tax up to £3,600.

Corporation Tax – Whilst we welcome the announcement that the 20% rate of corporation tax will not be increased to ensure the UK remains a competitive place to do business, various announcements were made in the detail to corporate tax:

Loss relief provisions – The rules on the availability of loss relief will be eased for the restriction on the availability of relief following a change of ownership. This will be performed by two means, firstly by allowing a holding company to be inserted and secondly by amending the definition of ‘significant increase in capital’ where the change of ownership occurs in an investment company to both £1 million or 25% both before and after the change of ownership

Film Tax Relief – Relief of 25% will be available on the first £20 million of qualifying production expenditure and 20% thereafter from April 2014. The minimum expenditure requirement will also be reduced from 25% to 10%

Associated Company Rules – Following much debate as to how the government will deal with the unified tax rate of 20% from April 2015 it has announced that new rules will replace the existing associated company rules based on a 51% group membership

Controlled Foreign Companies – With immediate effect from 5 December, changes will be made to the CFCs rules to address the transfer of offshore of profits from existing UK intra-group lending

Limited Liability Partnerships – Following the review announced in the Budget 2013 to tackle partnerships which were being used to disguise employment remuneration and the tax-motivated allocation of business profits to corporate partners it has confirmed that new proposals will be introduced in the Budget 2014

 

Tax Avoidance – The government has remained determined to tackle tax avoidance and following a consultation over the summer has announced further measures;

High Risk Promoters– A new information disclosure and penalty regime for the high risk promoters of tax avoidance schemes. Clients of high risk promoters will also be required to identify themselves to HMRC

Amending Tax Returns – New powers requiring tax payers to amend their tax returns in cases where a tax avoidance scheme has not worked in another party’s litigation and to face new penalty if they pursue litigation on the same scheme and are likewise unsuccessful

Accelerated Tax Payment – The government will remove the cash advantage from sitting and waiting on the dispute on tax avoidance schemes by issuing ‘pay now notices’ to tax payers. These will initially be issued to taxpayers who are using tax avoidance schemes which have already been defeated in the courts.

Autumn Statement 2013 – Personal Tax Measures

Thursday, December 5th, 2013

Personal allowance

It was announced in 2013 Budget that the personal allowance will be increased by £560 to £10,000 from April 2014. As a result, by April 2014 a typical basic rate taxpayer will pay £705 less income tax per year in cash terms than they would have in 2010-11.

The coalition is expected to have a May 2015 election pledge to increase this allowance to £12,500 and so further rises may still appear next year.

 Transferable tax allowance for married couples

Married couples and civil partners will be able to transfer £1,000 of their income tax personal allowance to their spouse. This will be effective from 2015-16 and will be available to couples where neither spouse is a higher or additional rate taxpayer. Savings will be worth up to £200 p.a . We are still unsure of the logistics of this measure, especially around self-assessment tax returns but we are hopeful that it will be dealt with via Pay As You Earn codings.

Pensioners

In April 2014 State Pension Rates will increase by £2.95 per week for the full basic State Pension.

There will also be an option for current pensioners and those who reach State Pension age before the introduction of the new single tier pension, to top up their Additional State Pension record through a new class of voluntary National Insurance contributions called Class 3A voluntary contributions. The scheme will be introduced in October 2015 and will be time limited. Details of the scheme will be set out closer to the time of implementation.

ISA

The government will increase the ISA, Junior ISA and Child Trust Fund annual subscription limits to £11,880. The Junior ISA and Child Trust Fund limits will both be increased to £3,840.

Social investment tax relief

The government will introduce a new tax relief to encourage individuals to invest in social enterprises. The new relief will be available from April 2014 and organisations which are charities, community interest companies or community benefit societies will be eligible. Further detail will be published by the government in a roadmap for social investment in January 2014.

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Autumn Statement 2013 – CGT for UK non-residents

Thursday, December 5th, 2013

In a widely predicted move, and one no doubt with a general election in mind, the government will introduce capital gains tax (CGT) on future gains made by non-residents disposing of UK residential property from April 2015. We expect further guidance on this in April 2014. This brings the rules for non-UK residents in line with UK residents when selling second properties in this country.

In an attempt to reduce the incentive for those with multiple homes to exploit the rules, there will also be a reduction to the capital gains tax principle private residence relief (PPR) from the current 36 month exemption to 18 months.

A reduction to 18 months from 36 months will have a substantial effect for capital gains tax but there is also the CGT annual allowance and the interaction with letting relief to consider..

Autumn Statement 2013 – what was missing?

Thursday, December 5th, 2013

What was missing?

After last year’s surprise announcement over the tenfold increase in the Annual Investment Allowance, open minds were the order of the day. Areas not announced in the Autumn Statement 2013 which we thought might get a mention included:

Seed Enterprise Investment Scheme – the threshold for the SEIS was predicted to increase from £150k to £500k but no announcement was made to this investment-boosting measure

Personal Allowance – this is due to increase to £10,000 from April 2014 but there was no announcement of the much championed increase to £10,500 from April 2015

Discretionary Trusts – It was predicted that the IHT nil band, currently £325,000 would be spread over multiple trusts of the same settlor, although this measure played no part in today’s statement

Stamp Duty – Suggestions that a decrease in the ‘mansion tax’ threshold from £2m to £1m did not come to light and calls to increase the threshold from £250k went unanswered

Buy to Let – We were expecting mortgage interest relief to be abolished although buy to let landlords will no doubt welcome the continued availability of this tax relief

ISAs – Millions of investors will breathe a collective sigh of relief as the feared lifetime cap on savings of £100,000 did not materialise

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