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.