Chancellor of the Exchequer, George Osborne delivered the 2013 Autumn Statement providing an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. In his statement the Chancellor set out how the Government will continue to secure the public finances, support families with their costs, help businesses to grow and equip young people with the skills they need to succeed say Harris & Co accountants Northampton
The key tax measures announced are outlined below:
UK oil and gas fiscal regime: new onshore allowance
•A new onshore allowance was announced to kick start the exploitation of onshore oil and gas (including shale gas) in the UK. It aims to reduce the amount of adjusted ring fence profits subject to the supplementary charge and will have effect in respect of capital expenditure incurred on and after 5 December 2013 in relation to an onshore oil and gas related activity.
Bank levy change in rate
•The Bank Levy full rate will be set at 0.156% from 1 January 2014.
Film Tax Relief
•From April 2014 the rate of film tax credit for surrenderable losses will be 25% on the first £20 million of qualifying core expenditure (subject to a maximum of 80% of qualifying core expenditure) and 20% thereafter (to a maximum of 80% qualifying core expenditure). This is subject to state aid approval. The minimum UK expenditure qualification will also change from 25% to 10%.
•A consultation will be launched in spring 2014 on the introduction of a limited corporation tax relief for commercial theatre productions and a targeted relief for theatres investing in new writings or touring productions to regional theatres.
Banking Code of Practice
•From 31 March 2015, HMRC will publish an annual report on the Code of Practice on Taxation for Banks (the Code) which will list all banks, building societies and investment firms that have unconditionally adopted the Code as well as those that have not. In addition it may name any bank, building society or investment firm which HMRC considers has not complied with the Code.
Capital Gains Tax (CGT)
CGT Private Residence Relief – Final period rule
•From 6 April 2014 the final period exemption, which applies to a property that has been a person’s private residence at some time even though they may not be living in the property at the time they dispose of it and they may be claiming private residence relief on another property at the same time, will be reduced from 36 months to 18 months.
CGT non-residents and UK residential property
•As expected, from April 2015 a capital gains tax charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published in early 2014.
CGT Annual Exempt Amount
•The annual exempt amount will be £11,000 for the year 2014 to 15 and £11,100 for 2015 to 16 and subsequent years. The exemption for most trustees will be £5,000 and £5,500 respectively.
Personal Tax, Benefits and Credits
Personal Allowance, Rates of Tax, National Insurance Contributions for 2014 to 15
•As announced at Budget 2013, people born after 5 April 1948 will be entitled to a basic personal allowance of £10,000 for 2014-15. The ‘higher rate threshold’ (the sum of the basic personal allowance and the basic rate limit) will be £41,865.
•For 2014-15, there are no changes to the percentage rate of contribution for Class 1, Class 1A, Class 1B and Class 4 National Insurance Contributions (NICs) but there are changes to all of the thresholds and limits. The weekly rates for Class 2 and Class 3 NICs will be increased. The Class 1 Upper Earnings Limit (UEL) and the Class 4 Upper Profits Limit for NICs will continue to be aligned with the point at which higher rate tax becomes payable.
Tax Credit, Child Benefit and Guardian’s Allowance: rates for 2014 to 2015
•Disability elements of tax credits increased in line with CPI of 2.7%. Other rates are increased by 1%. The family element of child tax credit is not increased annually and remains at £545
•Child Benefit is increased by 1%
•Guardian’s allowance is increased in line with CPI of 2.7%
•Married couples and civil partners will be allowed to transfer £1,000 of their income tax personal allowance to their spouse where neither is a higher rate taxpayer. This means the transferor’s personal allowance will be reduced by £1,000 and the spouse or civil partner receiving the transferred allowance will be entitled to a reduced income tax liability of up to £200.
Class 3A National Insurance Contributions (NICs) for enhanced state pension
•From October 2015 a new class of voluntary NICs (Class 3A) will be introduced that gives those who reach state Pension age before 6 April 2016 an opportunity to boost their Additional State Pension.
NICs for under 21s
•From 6 April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.
Social Investment Tax Relief
•A new tax relief for investment in social enterprise will commence in April 2014. Following consultation, investment in social impact bonds will also be eligible.
ISA, CTF, SIP and SAYE Annual subscription limits 2014 to 15
•for Share Incentive Plans (SIPs) the individual limits on the ‘free’ shares companies can award to employees for 2014 to 15 will be increased from £3,000 to £3,600 per year and the individual limits on the ‘partnership’ shares employees can purchase will be increased from £1,500 to £1,800 per year (or 10% of an employee’s annual salary)
•for Save as You Earn (SAYE) the amount that employees can save and apply towards the purchase of share for 2014 to 15 will be increased from £250 to £500 per month
•the overall annual Individual Savings Account (ISA) subscription limit for 2014 to 15 will be £11,880, of which £5,940 can be invested in cash
•the annual subscription limit for Junior ISA and Child Trust Fund (CTF) for 2014 to 15 will increase from £3,720 to £3,840
Inheritance Tax (IHT)
Simplification of trusts
•The Government will legislate to simplify filing and payment dates for IHT relevant property trust charges. It will also introduce legislation to treat income arising in such trusts which remains undistributed for more than 5 years as part of the trust capital when calculating the 10-year anniversary charge. The government will consult on proposals to split the IHT nil rate band available to trusts with a view to delivering this change alongside simplification of the trust calculations in 2015.
Vulnerable Beneficiary trusts
•The Government will extend with immediate effect from 5 December 2013 the CGT ‘uplift’ provisions that apply on the death of a vulnerable beneficiary and extend from 2014-15 the range of trusts that qualify for special income tax, CGT and IHT treatment.
Inheritance Tax Online
•HMRC will be investing in a new online service, expected to become available in 2016, to support the administration of Inheritance Tax.
Cultural Gifts Scheme and estate duty
•The government will amend legislation underpinning the Cultural Gifts Scheme to ensure that estate duty is brought into charge where appropriate.
Joint digital registration for Charities with Charity Commission
•HMRC will develop a new IT system, planned to be introduced in 2015 to 16, to allow organisations wanting to register with the Charity Commission for England & Wales (CCEW) and seeking charity tax status with HMRC to submit their applications through a single online portal. It will later be extended to enable charities in Scotland and Northern Ireland to register with their charity regulators at the same time as they apply to HMRC.
Corporate gift aid for Community Amateur Sports Clubs (CASCs)
•Legislation in Finance Bill 2014 will extend corporate Gift Aid on gifts of money to include qualifying donations of gifts by companies to Community Amateur Sports Clubs (CASCs).
Stamp duty land tax (SDLT): charities relief
•The government will legislate to make it clear that partial relief from SDLT is available where a charity purchases property jointly with a non-charity.
Anti Avoidance and Evasion
The Government will continue to take further steps to close down avenues for both tax avoidance and evasion. It has announced the following 5 measures which take immediate effect from 5 December 2013:
Changes to the debt cap provisions
•The measure comprises of 2 changes to improve the effectiveness of the World Wide Debt Cap (WWDC). The first is to the grouping rules and the second is to the regulation-making powers. It will have effect in respect of the change to the grouping rules for accounting periods starting on or after 5 December 2013 and the change to the regulation-making powers will have effect on or after the date that Finance Bill 2014 receives Royal Assent.
Controlled foreign companies (CFC): profit shifting
•The measure switches off the partial exemption rules for loan relationship credits of a CFC that arise from an arrangement with a main purpose of transferring profits from existing intra group lending out of the UK. It also amends the anti-avoidance rule relating to the transfer of external debt to the UK to ensure that the rule works as intended. The first part of the measure will apply to arrangements entered into on or after 5 December 2013 and the second part will have effect for accounting periods beginning on or after 5 December 2013.
Partnerships review: partnerships with mixed membership
•The first element of the partnerships review measure will affect mixed membership partnerships where partnership profits are allocated to a non-individual partner in circumstances where an individual member may benefit from those profits. The second element will affect cases where partnership losses are allocated to an individual partner, instead of a non-individual partner, to enable the individual to access certain loss reliefs. The changes will take effect from 6 April 2014 with the exception of anti-avoidance rules concerning tax-motivated profit allocations. These rules come into force from 5 December 2013 in order to protect against risks to tax revenue.
Avoidance schemes using total return swaps
•The measure blocks avoidance schemes where deductions are claimed for payments between companies in the same group under derivative contracts which are linked to company profits. It will apply from 5 December 2013 to schemes entered into on any date.
Double Taxation Relief (DTR): revenue p