Finance Bill 2011 at a glance

Posted by 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 members. Further details are available from the HMRC and Treasury websites.
Key topics
  • 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(Treasury PDF 485kb) – the rules requiring members of registered pensions schemes to secure an income by age 75 will be repealed.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.
  • 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.





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