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Tax relief for expenditure on cars TM ¶163, 422 Following a previous announcement, the capital allowances regime for cars is set to change from 1 April 2009 (6 April 2009 for income tax purposes). From then, cars with a CO2 emission level: - over 160g/km will enter the special rate pool and attract allowances at 10%; and - at or below 160g/km will enter the general pool and attract allowances at 20%. This is irrespective of cost. Due to the fact that they enter the pool, there will be no restriction on the amount of allowance that will arise, nor will there be any allowances or charges automatically on disposal. For cars that are leased, a flat rate disallowance of 15% will be made but only for cars over the 160g/km limit. Cars that were previously exempt from these rules will now come within this legislation.
Memo points: 1. Cars with private use, for income tax purposes, will still be identified separately. 2. Legislation will be implemented with regard to cars currently classed as expensive and their continuing tax treatment. At present it is expected that they will continue under the old regime for a period of 5 years before transferring any residual value to the appropriate pool. 3. Motorbikes are excluded from the new legislation and will now be eligible for the annual investment allowance.
Extension of land remediation relief (LRR) TM ¶757+ For accounting periods beginning on or after 1 April 2009, LRR will be extended to expenditure incurred on: a. remediating long term derelict land i.e. which has been derelict since 1 April 1998. Costs relating to the following will qualify: - post-tensioned concrete heavyweight construction; - foundations of buildings or other structures or machinery bases; - reinforced concrete pilecaps or basements; and - underground pipes or other apparatus for the supply of electricity, gas, water or telecommunication services or for drainage or sewerage; and b. the removal of certain naturally occurring contaminants which can cause a market failure e.g. Japanese Knotweed, radon and arsenic (excluding the removal of Japanese Knotweed to landfill sites). HMRC will be publishing draft guidance shortly with a view to giving more certainty to potential claimants of the relief.
Memo points: 1. Relief for Japanese Knotweed will also apply where infestation has occurred during the claimant’s ownership of the land. 2. Expenditure incurred as a result of work required under specified statutory provisions will not qualify for relief.
Changes to REIT eligibility criteria TM ¶986 A number of group structures have been identified that take advantage of the REIT legislation where it was not intended. For periods beginning on or after 1 April 2009, the existing test will be extended to exclude wider economic groups where the properties concerned are occupied by group members.
Carry back of losses TM ¶1274 As a one year extension, companies will be able to carry back trading losses incurred in a period ending from 24 November 2008 to 23 November 2009 for 3 years opposed to the standard previous year only. This will be done taking later years first. There will be no cap on the amount of loss that can be carried back to the immediately preceding 12 months but any losses carried further back cannot exceed £50,000 in total. If the accounting period is less than 12 months the £50,000 limit will be pro-rated.
Small companies’ tax rate TM ¶1342 The rate of tax applying to companies with profits below £300,000 will remain at 21% despite prior announcements. The scheduled 1% increase will be deferred until 1 April 2010.
Sale of intermediate lessor companies TM ¶1802 The existing rules on the sale of a lessor company will be extended to cover companies that become intermediate lessors. This will ensure that capital allowances given on assets that the company did not legally own are recaptured.
Notification of tax-saving schemes by users TM ¶2236 For accounting periods beginning on or after 1 April 2009, a scheme user will need to report the scheme reference number on the tax return for the accounting period in which the scheme is implemented. This is a minor change from the current requirement to report the scheme reference number in the accounting period when it is received, if this predates the scheme’s actual implementation.
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Corporation tax |
