RESTRICTING TAX ADVANTAGE ON INCORPORATION
The corporation tax relief a company may obtain following the acquisition of a business through the amortisation of ‘goodwill’ from a related individual or partnership will be restricted. This will afect acquisitions on or after 3 December 2014.
CAPITAL GAINS TAX
RESTRICTING TAX ADVANTAGE OF ENTREPRENEURS’ RELIEF ON INCORPORATION
Individuals will be prevented from claiming Entrepreneurs’ Relief on disposals of the ‘goodwill’ when they transfer the business to a related close company, with efect from 3 December 2014.
GAINS DEFERRED INTO QUALIFYING EIS OR SITR INVESTMENTS
The government will allow gains which are eligible for Entrepreneurs’ Relief, but which are deferred into investments qualifying for the Enterprise Investment Scheme (EIS) or Social Investment Tax Relief (SITR), to remain eligible for Entrepreneurs’ Relief when the gain is realised.
These new rules will beneit qualifying gains on disposals that would be eligible for Entrepreneurs’ Relief but are deferred into the EIS or the SITR on or after 3 December 2014.
REPEAL OF LATE PAID INTEREST RULES
The government will repeal rules concerning loans made to UK companies by a connected company in a non-qualifying territory.
INCOME TAX – MISCELLANEOUS LOSS RELIEF
Legislation will be introduced to deny loss relief where a miscellaneous loss, or miscellaneous income, arises from relevant tax avoidance arrangements with efect from 3 December 2014.
Further legislation will be introduced with efect from the 2015/16 tax year to limit relief to miscellaneous income of the same type as the loss.
PROFIT SHIFTING AND BASE EROSION
A new diverted proits tax at 25% will be introduced from 1 April 2015 to counter the use of aggressive tax planning by multinationals to divert proits from the UK.
Other anti-avoidance measures have also been introduced which will require multinationals to provide high level information to HMRC on their global allocations of proits and taxes paid.
There will also be consultation on new rules for addressing hybrid mismatch arrangements to prevent multinational enterprises avoiding tax through cross border business structures.
CIVIL DETERRENTS FOR OFFSHORE TAX EVASION
Legislation will be introduced to enhance civil penalties for ofshore tax evasion.
A wide range of changes were announced, including amending the existing ofshore penalties to include inheritance tax and a new aggravated penalty of up to a further 50% for moving hidden funds to circumvent international tax transparency.
PROMOTERS OF TAX AVOIDANCE SCHEMES
Legislation covering high risk promoters of tax avoidance schemes will be updated and clariied to ensure that the 2014 legislation functions as intended.
Changes will include a broader range of connected persons under the common control of a promoter in the regime and clarify the time limits within which HMRC can issue conduct notices to promoters who fail to disclose the scheme.
SPECIAL PURPOSES SHARE SCHEMES
The government is taking action to block the tax advantage ofered to higher rate and additional rate taxpayers by special purpose share schemes which allow shareholders to choose how to receive their ‘dividend’ so that it is taxed at preferential rates.
This typically involves the issue of a share that is purchased back by the company shortly after, with no commercial purposes other than to secure a tax advantage for the shareholder.
This advantage has been removed by treating the amount received the same way as dividend income, where the individual shareholder is ofered the choice.
Speak to us about how these measures afect you.