5 December 2013
The Chancellor delivered his 2013 Autumn Statement today. We have summarised some of the tax highlights below.
There was very little in the way of new corporate or business tax measures. The main points were:
- Partnership tax changes. As already announced the Government will introduce new legislation, effective from April 2014, targeted at partners where there is a ‘disguised employment’ and to counter the perceived tax avoidance by use of corporate partners.
- Employers NIC reduction for Under 21s. Employers NICs will be abolished for those under 21 from April 2015, with the exception of those earning more than the Upper Earnings Limit (to be £42,285 per annum in 2015-16).
- Employee ownership. From April 2014, the Share Incentive Plan annual limits will increase to £3,600 per year for free shares and to £1,800 per year for partnership shares and the maximum an employee can contribute to Save As You Earn arrangements will increase to £500 per month. In addition, following consultation launched at Budget 2013, the Government will introduce three new tax reliefs to encourage and promote indirect employee ownership: (1) From April 2014, disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from Capital Gains Tax; (2) Transfers of shares and other assets to employee ownership trusts will also be exempt from Inheritance Tax, subject to conditions; and (3) 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 (capped at £3,600 per annum). Finally, following consultation announced at Budget 2013, the government will implement a package of simplifications proposed by the Office for Tax Simplification on ‘unapproved’ share schemes, to take effect in 2014.
- Film and theatre tax reliefs. The government will consult in 2014 on introducing new Corporation Tax reliefs for certain theatre productions and subject to state aid clearance, improvements will be made to film tax reliefs.
For private clients, some new and important measures were announced. The main points were:
- Transferable personal allowance. From 2015-16 spouses and civil partners (where neither are higher or additional rate taxpayers) will be able to transfer £1,000 (level will increase in line with increases to the personal allowance) of their personal allowance for Income Tax to their spouse or civil partner.
- Venture Capital Trusts changes. From April 2014, investments made via share buy-back offers will no longer qualify for tax relief.
- Reduction in principal private residence relief. Currently principal private residence relief provides that the final 36 months of ownership of a property, that was once an individual’s main residence, is not subject to Capital Gains Tax. From April 2014 this final 36 months relief will be reduced to 18 months.
- Capital Gains Tax for non UK residents. From April 2015, non UK residents will be subject to Capital Gains Tax on disposals of UK residential property. The Government will consult on the detail of the new legislation during 2014.
- Trusts simplification. Following consultation, the Government will introduce legislation to simplify filing and payment dates for relevant property trust charges and 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 charge. The Government will also consult on proposals to split the IHT nil rate band available to trusts.
- Increases to ISA limits. The ISA, Junior ISA and Child Trust Fund annual limits will increase in line with CPI. The 2014/15 ISA limit will be £11,880 (50% of which can be saved in cash) and the 2014/15 Junior ISA and Child Trust Fund limits will both increase to £3,840.
- Individual Protection for pensions. As previously announced, individual protection 2014 will be introduced as a consequence of the reduction in lifetime allowance for pension savings to £1,250,000 from April 2014.
Tax Avoidance and Evasion
On the subject of avoidance and evasion, much of what was published today built on already announced intentions and consultations. The main points were:
- BPRA abuse. Following consultation the Government is making changes to legislation which will take effect from April 2014 to counter perceived abuse of the allowance.
- Controlled Foreign Companies profit shifting. With immediate effect the Government will counter the transfer offshore of profits from existing UK intra-group lending.
- Employment intermediaries. The Government will seek to amend or build on existing anti-avoidance legislation targeting employment intermediaries where the ‘worker’ is in effect an employee.
- High risk promoters targeted. As already announced, the Government will introduce a new information disclosure and penalty regime for high-risk promoters of tax avoidance schemes. Following consultation the Government will now work on definitions for the legalisation and on disclosure requirements for clients of these promoters.
- Accelerating payment in tax avoidance cases. In addition to changes to the penalty regime for users of failed tax avoidance schemes, the Government will seek to expand powers of HMRC to collect tax in disputed cases prior to final resolution.
Much of the detail of today’s Autumn Statement was already known, however particularly for private clients there were some new measures announced that require attention. In particular, owners of residential properties that were once a main residence may wish to consider planning steps ahead of April 2014 and non UK resident owners of residential property may need to plan ahead of April 2015.
For further information or advice on any measures in the 2013 Autumn Statement, please contact us on 01788 539000.
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