Posted by AccountingWEB.co.uk in Tax on Fri, 10/12/2010 – 13:26
As part of its new approach to tax policy making, the government published 500+ pages of draft clauses and accompanying explanations on 9 December 2010 for measures that will be included in the Finance Bill 2011.
The Finance Bill 2011 will also legislate the annual changes in rates and duties that were announced previously. With the exception of the Capital Gains Tax threshold for individuals in 2011-12, which has yet to be set (and statutory maternity pay rates that we’re still trying to find), the key tax allowances and rates are set out in our 2011-12 tax tables.
This article details a comprehensive list of published measures, with links to those that are of most relevance to AccountingWEB.co.uk members. Further details are available from the HMRC and Treasury websites.
- Pensions tax – tax relief restricted by new annual and lifetime allowance levels
- Personal tax – changes to furnished holiday lettings rules and employer-supported childcare
- Corporation tax – reductions for Annual Investment Allowance and writing-down allowances; plus foreign branch taxation and interim CFC reforms
- Indirect tax – samples to be VAT free following EMI victory at ECJ
- Anti-avoidance – crackdowns on trust arrangements
- HMRC powers and administration
- 2011-12 tax tables
- Restricting pensions tax relief (HMRC guidance) – the Finance Bill will enact arestriction on pensions tax relief for individuals by reducing the annual allowance from 2011 to £255,000 and the lifetime allowance from 2012 to £1.5m. Further details can be found on the Treasury website.
- Pensions annuitisation (Treasury PDF 485kb) – the rules requiring members of registered pensions schemes to secure an income by age 75 will be repealed. Further detail is set out in the responses to the consultation document published today. The government intends to publish draft legislation covering this element by February.
- Retirement savings programme (Treasury PDF 130kb) – legislation will be introduced to deal with unintended tax consequences which arise due to the interaction of Pensions Act 2008 and tax legislation.
- Changes to the furnished holiday lettings regime – in the absence of a clear majority view on the previous consultation, the existing proposals to increase minimum availability/let periods will be increased from April 2012. Loss relief will also be restricted within each FHL business.
- Income tax rates, rate limits and personal allowances for 2011-12 (PDF 195KB)– the figures have been compiled into a 2011-12 tax tables digest.
- Changes to Tax Reliefs for Employer-Supported Childcare – HMRC notes on clauses to remove obligation on employers to make salary sacrifice/flexible benefit childcare schemes available to all employees.
- Employer supported childcare: changes to tax reliefs – tax relief on childcare vouchers and directly-contracted employer-supported childcare schemes will be the same for all taxpayers.
- Changes to the substantial donors rules – crack down on abuse of charity tax reliefs.
- Tax treatment of MPs’ accommodation expenses
- Protection of Vulnerable Groups Scheme registration fee – legislation to ensure an income charge does not arise on the fee for registering with the Scottish Protection of Vulnerable Groups Scheme.
- Capital allowances: writing-down allowances – from April 2012 the rate of writing-down allowances on the main pool of plant and machinery expenditure will be reduced to 18%, and the special rate pool to 8%.
- Capital allowances: annual investment allowance –will be reduced to £25,000 from April 2012.
- Corporation tax: main rate – next stage in the annual series of 1% reductions will take the rate from 27% to 26% from 1 April 2012. Consultation continues on whether legislating for the remaining pre-announced reductions would give business greater certainty. Also consult our 2011-12 tax tables.
- Corporation tax: small profits rate – the small profits rate will be reduced to 20% from 1 April 2011.
- Corporate capital gains simplification – rules for groups will be simplified to: remove some existing restrictions on the use of capital losses within a group; modernise degrouping charge rules; and replace existing anti-avoidance rules with a clearer purpose-based rule.
- Reform of associated company rules as they apply to the Small Profits Rate of Corporation Tax – new definition will ensure companies are only held to be associated where substantial commercial interdependence exists between them.
- Interim controlled foreign companies (CFCs) reform (HMRC notes) – as set out in the corporate tax roadmap the CFC rules will be simplified ahead of fuller reforms planned for Finance Bill 2012.
- Taxation of foreign branches (HMRC notes) – as set out in the corporate tax reform document published on 29 November 2010, legislation will be introduced to provide an opt-in exemption from corporation tax for the profits of foreign branches of UK companies.
- OECD transfer pricing – definition of “transfer pricing guidelines” to be amended.
- Bank Levy – permanent levy will be introduced with effect from 1 January 2011 based on the total chargeable equity and liabilities as reported in the firm’s balance sheet. Initial rate of 0.05% in 2011 will increase to 0.075% in 2012.
- Modernisation of investment trust companies – new definition of an “investment trust”.
- Stamp duty reserve tax – changes to restrict Schedule 19 to collective investment schemes’ investments in underlying funds where those funds are “significantly invested” in UK equities.
- Oil and Gas Minor Measures
- Tonnage Tax and leasing
- International accounting standards and leasing
- Life insurance apportionment rule changes to correct an unintended tax charge.
- VAT treatment of business samples – bringing legislation into line with Europe following HMRC’s loss in the EMI case at the European Court of Justice. Marketing product samples provided free of charge will not be liable to VAT.
- Exceptional rates of vehicle excise duty for certain heavy goods vehicles (PDF 110KB)
- Academies VAT refund (PDF 193KB)
- Disguised remuneration – in a written ministerial statement on 6 December Exchequer Secretary David Gauke explained the government’s plans to crack down on trusts and other third-party employee reward arrangements designed to avoid or defer income tax or NICs. These will include Employee Benefit Trusts and Employer Financed Retirement Benefit Schemes (EFRBS).
- Group mismatches – groups will not be able to use loans or derivative contracts to generate profits or losses purely as a result of accounting asymmetries.
- Derecognition of Corporation Tax loan relationships – avoidance of Corporation Tax will not be possible for loan relationships and derivative contracts not fully recognised for accounting purposes. This was confirmed in the written ministerial statement on 6 December 2010.
- Functional currency switch schemes – rules tightened to counter avoidance involving changes in the functional currency of an investment company. Investment companies will be able to elect for a functional currency for tax purposes other than that in the accounts.
- VAT supply splitting – printed matter connected to services provided, but sourced from different suppliers will no longer be zero-rated.
- Financial securities for PAYE – proposals put forward for consultation to let HMRC take a security from employers for PAYE and NICs that is seriously at risk.
- Data-gathering powers – bulk information gathering powers planned to enable HMRC to carry out cross-industry analyses.