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UK: Summer time and tax living ain’t easy

Tuesday, 19 August 2014   (0 Comments)
Posted by: Author: Chartered Accountants Ireland
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Author: Chartered Accountants Ireland

Despite it being the summer, there has been no let-up of late in consultations being launched by the current Government.

Recently launched consultations include:

Inheritance Tax: exemption for emergency service personnel

The Government is considering extending the Inheritance Tax exemption for armed forces personnel who die whilst on active service to all emergency service personnel who die in the line of duty, or whose death is hastened by injury incurred in the line of duty. Responses should be submitted by 15 October 2014. 

Internationally mobile employees and earnings related securities

This consultation relates specifically to liability for earnings-related National Insurance Contributions from employment related securities income earned by internationally mobile employees. Responses should be submitted by 16 October 2014. 

Travel and subsistence review

In response to the Office of Tax Simplification’s  January 2014 report on the tax treatment of employee benefits and expenses, ‘Review of employee benefits and expenses: second report’, the government announced at Budget 2014 that it intended to review the rules underlying the taxation of travel and subsistence expenses. This consultation is the first stage of that review.

In the first stage of the consultation the government wishes to improve its understanding of the commercial realities of travel and subsistence payments. Amongst other issues, the government intends to explore the circumstances in which employers pay travel and subsistence expenses (whether tax relievable or not); how tax influences these decisions; and the other factors which influence commercial decision making in this area.

In this stage the government also intends to discuss the framework within which it will develop any new principles to the underlying rules on travel and subsistence expenses. In particular the government wants to discuss what sort of payments should qualify for tax relief, who they should need to be paid by, to whom and in what manner – and whether tax relief for subsistence payments need be tied to the rules for travel. The government intends to report on this stage of the review at the Autumn Statement 2014. 

Annual Tax on Enveloped Dwellings (ATED): reducing the administrative burden for business

This consultation seeks views on options to reduce the administrative burden for businesses within ATED with responses due by 16 September 2014. 

Legislating Extra Statutory Concession D33

ESC D33 covers a number of circumstances where a capital sum is received from a right of action. The concession was amended in January 2014 so that only the first £500,000 of a capital sum where there is no underlying asset was exempt and exemption for amounts in excess of this had to be made in writing to HMRC.

This consultation seeks views on introducing a limit of £1,000,000 exemption with amounts in excess of this liable to Capital Gains Tax (CGT). It also seeks views on legislating the relief given by ESC D33 for personal compensation or damages and indemnities. Responses are due by 15 September 2014. 

Strengthening the Tax Avoidance Disclosure Regimes

This consultation contains proposals to further strengthen the Disclosure of Tax Avoidance Schemes (DOTAS) and initial thinking about how the VAT Disclosure Regime might be updated. Responses are due by 23 October 2014. 

Maximising economic recovery: consultation on a cluster area allowance

This consultation considers a new cluster area allowance to encourage investment in ultra-high pressure, high temperature oil and gas fields. The new allowance builds recommendations for maximising economic production of oil and gas. It has been designed not only to support investment in technically challenging development projects, but also to encourage exploration in the surrounding areas. The allowance will reduce the tax on a portion of a company’s profits from 62% to 30% at current rates. Responses should be submitted by 30 September 2014. 

VAT: Mini One Stop Shop

This is a technical consultation to analyse amendments to the VAT Regulations arising as a consequence of the introduction of the Mini One Stop Shop. Responses should be submitted by 28 August 2014. 

The following consultation outcome was also recently published "Implementing a capital gains tax charge on non-residents” with the promise of a more detailed response in early Autumn 2014.  In the meantime it has been announced that in recognition of the points raised in relation to the treatment of different types of diversely held entities, the Government intends to introduce a form of "close company” test to limit the scope of the extension of CGT to non-residents. 

This should ensure that the extension of CGT will not apply where a disposal of UK property is made by diversely held institutional investor that holds UK residential property directly, or by one which invests indirectly through an arrangement that is not controlled by a few private investors. The government intends to draw on existing legislation to achieve this.

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