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INCOME TAX |
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Guardians and kinship carers See TM ¶2408 An income tax exemption similar to that available to adopters is to be made available to special guardians and certain kinship carers. Exemption will apply from 6 April 2010. Restriction of property losses See TM ¶2775 At present an individual sustaining a loss in a property business can offset any capital allowances in that loss against general income. However, from 24 March 2010 this will be restricted so that no loss arising from the use of the annual investment allowance (TM ¶360+) will be available where “relevant tax avoidance arrangements” have been entered into. Individual savings accounts See TM ¶2797 As well as confirming that the investment limit for an ISA for the tax year 2010/11 will be £10,200 (with a limit that can be invested in cash of £5,200), the government has announced that from 6 April 2011 for the course of the next Parliament the investment limit will be indexed in line with the retail prices index. This will be based on the RPI in September of the previous year and will be announced as quickly as possible, and in any event no less than 4 months before the start of the new year. If the RPI movement is negative no change will be made to the limit. The maximum cash element will remain at 50% of the total limit. Venture capital and enterprise investment scheme changes See TM ¶2873, 2913 A number of changes are to be made to these schemes in order to continue to receive approval from the European Commission. These are to be introduced in the first Finance Bill of the next Parliament VCTs only The requirement that shares in the VCT have to be listed in the UK will now be extended so that the shares will qualify if they are listed on any EEA market. The minimum holding of eligible shares that the VCT must hold will rise from 30% to 70% and at this time the definition will be amended to include shares that may carry certain preferential rights to dividends. EIS and VCTs Where it is reasonable to assume that the company raising the funds is in difficulty relief will be denied. The requirement that the company must have a trade carried on in the UK will also be relaxed so that the company only requires a permanent establishment in the UK. Employer-supported childcare See TM ¶3219 For all supported childcare (as opposed to workplace provided care) the condition that the scheme should be generally available to all employees is to be relaxed. Legislation will be introduced in the next Parliament to allow the exclusion of those at or near the minimum wage level from being offered a salary sacrifice arrangement. Zero-emission vehicles and low emission cars See TM ¶3286, ¶3300, ¶3310 New rules are to be introduced in relation to cars and vans that have no CO2 emissions. From 6 April 2010, for a period of 5 years, such a car or van will attract no benefit charge. This will also replace the current benefit charge on electrically propelled cars. A new category of ultra low emission level cars will also be introduced for the same period. Where a car has an emission level of 75g/km or less the benefit charged will be 5% of the list price of the vehicle. Company share option plans See TM ¶3428 With effect from 24 March 2010 shares in a company which is under the control of a listed company are no longer shares to which an approved CSOP can apply. This is a reaction to tax avoidance activity. Enterprise management incentives See TM ¶3467 Legislation is to be introduced into the first Finance Bill of the next Parliament to widen the scope of companies that may use this incentive scheme. From Royal Assent the requirement that the company must carry on a trade wholly or mainly in the UK will be removed and replaced with the condition that it must have a permanent establishment in the UK. Pension schemes See TM ¶3768, ¶3788, ¶9972 As previously announced the annual and lifetime allowances have been set at £255,000 and £1.8 million respectively. These are to be frozen at this level up to and including tax year 2015/16. Transactions in securities See TM ¶4040 The current rules, which seek to prevent taxpayers gaining a tax advantage from activities involving transactions in securities, are to be replaced with “clearer legislation targeted more effectively at arrangements involving tax avoidance”. Life policies: deficiency relief See TM ¶4098 With the introduction of the new additional rate of tax, and the additional dividend rate, from 6 April 2010, the rules on deficiency relief are to be amended to ensure that any relief due is to be given at the highest rate of tax an individual suffers in the year the policy comes to an end. New steps will be added to the calculation to ensure that any deficiency is first set against dividends at the additional rate, then other income at the additional rate before continuing as it does now. This will be subject to targeted anti-avoidance rules where the purpose of bringing the policy to an end is to secure a tax advantage. In this case the term “tax advantage” is defined as being where the amount of tax relief secured exceeds the amount of tax physically paid on that policy (being the total tax burden less the basic rate tax deemed to have been deducted). If this applies the relief is restricted to the amount of tax previously paid. Increased penalties See TM ¶4532, ¶9780 A new override will be applied to tax-geared penalty levels for tax periods commencing on or after 1 April 2011. This will apply a multiplier to the penalty, depending on the jurisdiction in relation to which the non-compliance occurs. » Where the jurisdiction has provision to exchange information on savings income automatically with the UK, the penalty percentages will be unaffected. » Where the jurisdiction has agreed to exchange information with the UK but does not automatically share that information, the penalty percentages will be increased by a factor of 1.5. » Where the jurisdiction has not agreed to exchange information with the UK, penalties will be doubled. |
