Tax measures proposed for the Finance Bill 2014 include a mix of measures which have already been consulted on and some new ideas. Most of these measures will apply from April 2014 unless otherwise indicated.
Income tax
Personal allowances
- The single person's allowance rises to £10,000, other allowances increase likewise.
- From 2015/16 couples may transfer £1,000 of their personal allowance to a spouse/civil partner who is a basic rate taxpayer - tax-saving £200.
Loan interest relief
Income tax relief is extended in respect of interest on loans to acquire an interest in a close company or employee-controlled company to include investments in companies resident in the EEA.
SIPs and SAYE options
The individual limits rise to £3,600 on free share awards and £1,800 on partnership shares, and employees can save under SAYE £500 per month.
Share schemes
- Tax advantaged employee share schemes move to self certification.
- Certain aspects of unapproved share scheme rules will be simplified.
- CGT and IHT relief on the disposal of shares in a trading company (or holding company of a trading group) to an employee shareholding trust.
- Income tax exemption for bonuses of up to £3,600 where the company is controlled by a qualifying employee trust.
Social Enterprise investment relief
Income tax and CGT relief for investments by individuals into Social Enterprises.
Employee non-share benefits
Medical treatment: tax exemption for up to £500 p.a. of medical treatment when employee absent from work due to ill-health or injury.
Beneficial loans: exemption threshold rises to £10,000 (£5,000 for 2013/14 and earlier years).
Car benefits
- Repeal of s114(3) ITEPA 2003 so that the full amount of car benefit is charged to tax.
- Changes to s144 and s158 to put beyond any doubt that payment for private use of a car or van must be made in the tax year in which private use was undertaken. Follows a tax tribunal decision: if a car benefit charge is to be avoided in earlier years, make a private use payment by 5 April 2014.
- Changes to the CO2 figures from 2016/17.
Pensions
Individual protection following the reduction of the standard lifetime allowance to £1.25 million.
Capital Gains Tax
- Annual exemption increases to £11,000 (£11,100 from 2015/16)
- Main private residence exemption: relief for the final period of ownership is restricted to 18 months (previously 36 months).
Inheritance Tax
- Nil rate band continues to be frozen until 2017/18.
- Changes to filing deadlines for periodic charges on trusts align filing and payment dates for IHT to six months after the month in which the chargeable event occurred.
- Changes to vulnerably beneficiary trusts: extending provisions and the range of trusts which will qualify for special IT, CGT and IHT treatment.
- Cultural Gifts Scheme, changes will mean that donating an object under the CGS will not make an estate financially better off than if it had been sold on the open market.
Company tax
- No further changes to tax rates (main rate drops to 20% from 2015).
- No changes as yet to close company loans, but further consultation to follow.
- Further legislation to ensure that the right tax is paid at the right time by companies under common control, including changes to the associated company basing the test on 51% group membership.
- Amendment to loss relief provisions on change of ownership: the insertion of a new group company will not bring about a change in ownership and a 'significant increase in capital' will only occur where capital after the change in ownership exceeds capital before the change by both £1m and 25%.
- Consultation on support for the film industry
- Review of loan relationships to prevent abuse of the bond rules.
Capital allowances
Business premises renovation allowances: scope to be clarified to ensure relief is limited to building and renovation works.
Mineral extraction allowances: changes where an activity enters or ceases to be within the charge to UK tax.
Charities
- Stamp Duty Land Tax: measures include relief, proportionately for charities who purchase an interest in land jointly with a non-charity purchaser.
- Corporate Gift Aid for Community Amateur Sports Clubs
- Anti-avoidance: restriction on tax reliefs where one of the main purposes of establishing a charity is for tax avoidance.
VAT
- As announced in Budget 2013 changes to the place of supply from where the supplier is established to where the customer belongs from 1 January 2015.
- Mini One Stop Shop VAT return for accounting for VAT in other Member States.
- Reduction for manufacturers to allow them to reduce their VAT payments to take into account refunds that they make to final customers.
Anti-avoidance
Transfer pricing: changes to transfer pricing compensating adjustments (as previously announced).
Offshore employment intermediaries
- changes so that the end user may have to account for PAYE (as previously announced)
- New measures under consultation to prevent offshore agency workers avoiding UK taxes by use of false self-employment
Partnerships
Legislation to counter:
- Disguising of employment relationships in relation to salaried members of LLPs.
- Tax motivated allocations of business profits or losses where there are mixed partnerships and companies (applies from 5 December 2013)
- Tax motivated disposals of assets through partnerships
Non-domiciles
New rules which are designed to prevent non-doms from artificially splitting employments between UK and overseas in order to gain a tax advantage.
High Risk tax scheme promoters and "follower penalties"
New measures which are designed name and close down those who HMRC sees as high risk promoters of tax schemes.
- Scheme users will have to notify HMRC if they have used a high risk promoter.
- Where HMRC is sucessful in tax avoidance cases before the Tribunal and the case is appealled a trigger will force other taxpayers using similar schemes to pay tax which would otherwise be in dispute. Taxpayers will be asked to settle their affairs or risk tax penalties if HMRC wins the appeal.
- This measure will affect current avoidance schemes and so the aim is that taxpayers lose any cash flow advantage of using a scheme.
