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AUTUMN STATEMENT NEWSLETTER CORPORATION TAX MEMO 2011-2012
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Newsletter Issue 1 |
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November 2011 |
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Asset-backed pension contributions See CTM ¶1212 Legislation (that is to be considered effective from 29 November 2011) is to be introduced in Finance Bill 2012 to target an avoidance scheme involving company pension scheme contributions. The Government has identified an arrangement that was being used to allow a company to receive a higher level of deduction than intended where an asset-backed contribution was made. Broadly, such contributions consist of an income-generating asset which is made available to the pension scheme. Before this new legislation, it was possible for the employer to receive a deduction for the upfront pension contribution, and then further deductions when income actually became payable to the pension scheme. From 29 November 2011, either: » these contributions will fall within the structured finance regime (CTM ¶2396), when tax relief will be restricted accordingly, and should the employer’s liability to make contributions be artificially reduced (or even removed), the balancing charge mechanism detailed below will come into effect; or » tax relief will only be available on the actual payment of income to the pension scheme. Transitional rules will apply to existing asset-backed arrangements, in relation to which tax relief has already been received, to ensure that the correct amount of relief is given, which will usually mean that: » deductions will not be available for any further payment of income (made on or after 29 November 2011) to the pension scheme (where relief has already been received upfront); and » a balancing charge mechanism will ensure that the overall tax relief received by the employer matches the actual cumulative value of the contribution received by the pension scheme. When there is a change to the original arrangement period, this will be treated as a cessation of the arrangement, and any excess tax relief will be recovered from the employer. Confirmation of enhanced capital allowances in certain enterprise zones See CTM ¶3338 Following the previous creation of new Enterprise Zones in particular areas of England, a 100% capital allowance is to be introduced for expenditure on plant and machinery in the following six zones: » Tees Valley; » North Eastern; » Humber; » Sheffield; » Black Country; and » Liverpool. This allowance is to apply for expenditure incurred between April 2012 and March 2017. Areas in Wales and Scotland may also be eligible in due course, once associated discussions have taken place. Introduction of patent box regime See CTM ¶3770+ Following the consultation over the summer, the Government will be releasing further details of the proposed scheme on 6 December 2011. This regime is intended to make the UK a more attractive jurisdiction in which to hold certain intangible assets, as it will impose a lower tax rate on profits arising from their exploitation (from 1 April 2013). Deduction for gifts of pre-eminent objects See CTM ¶5150 Following a previous consultation the Government will make available a deduction from a company’s corporation tax liability where it gifts a pre-eminent object (such as works of art or items of historical interest) to the nation. Details of the scheme are yet to be published but an overall limit of £30 million a year will be imposed. Research and development See CTM ¶8150+ The existing scheme, relating to the surrender of losses arising due to claims by SMEs in return for a payable tax credit, is to be amended and details will be published on 6 December 2011. It appears a further scheme will be introduced for larger companies to allow them to receive an “above the line” tax credit. The Government intends to introduce this from April 2013 following further announcements in Budget 2012. This change will not affect the reliefs given to SMEs at the moment. New incentivised investment scheme See CTM ¶8450+ From April 2012, a new type of tax incentivised investment scheme will be introduced to encourage investment in new business start-ups. The Seed Enterprise Investment Scheme (SEIS) will give an individual income tax relief of 50% of the investment value regardless of their marginal rate of tax, up to a maximum investment of £100,000 per annum. The cumulative investment limit for companies will be £150,000. To kick start interest in the scheme there will be a capital gains exemption, given where an asset is sold in 2012/13 and the gain arising is reinvested into a qualifying investment. EIS improvements See CTM ¶8463, ¶8468, ¶8471 Following consultation, the following criteria will be simplified: » connected person rules; and » the definition of qualifying shares.
The following types of companies will be excluded: » those set up for the purpose of accessing relief; and » businesses which invest in Feed-in-Tariffs. Further, companies acquiring shares in another company will also cease to qualify for EIS. The precise details of these measures should be released by 6 December 2011. VCT cap removed See CTM ¶8507 To reduce the administrative burden, the maximum investment limit (currently standing at £1 million) in any one company by a VCT will be removed. No date for implementation has been published. The same simplifications and exclusions will be implemented as for the EIS (see news item above). Controlled foreign companies reform See CTM ¶9440 Following the further round of consultation over the summer, the Government intends to publish further details of the reforms on 6 December 2011. |
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Disclaimer This newsletter is provided on the understanding that the information contained within it is for guidance only, and that the publisher is not in business to provide legal or accounting advice or other professional services. Readers entering into transactions on the basis of, or otherwise relying on, such information should seek the services of a competent professional adviser. While every care has been taken to ensure the accuracy of the contents, the editors and the publishers cannot accept responsibility for any loss occasioned to any person acting or refraining to act as a result of any statement in this newsletter. |
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Welcome to the first newsletter for the first edition of our new Corporation Tax Memo, covering the Autumn Statement made by the Chancellor on 29 November 2011. The Autumn Statement replaces the Pre-Budget Report (which itself was introduced by the previous administration), with the intention that it would update the House on the state of the nation’s finances, rather than proposed tax changes. However, with the economic forecasts having been revised down substantially, a number of tax announcements were made (mainly in outline only), and it is these announcements that are included in this newsletter. The details of the proposals, which will be published by the Government on 6 December 2011, will be the subject of a special edition of our online updates on 8 December 2011, ensuring that you are always kept up to date with developments affecting you and your clients. We trust that you will find it useful and informative in advising you about the changes and welcome any comments you may have as to how we can improve our service. We look forward to receiving your emails at flm@flmemo.co.uk |
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