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In brief: interest withholding; employee shareholding; IHT avoidance; maternity allowance; farmers’ single payment; Bill update; VAT; tobacco; ATED; DTR orders

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Interest withholding exemption consultation

The government is consulting until 27 February 2015 on draft Finance Bill legislation exempting deduction of income tax at source from yearly interest payable on unlisted securities known as ‘private placements’ which meet certain qualifying conditions. Conditions for the exemption will include the security being issued for a minimum period of three years. The primary legislation in FB 2015 will provide for regulations to set out more detailed conditions, including a requirement for the issuer to be a trading company. The exemption is aimed at midsize companies and infrastructure projects, thought to be the typical borrowers under this form of debt instrument.

Government rejects new employee shareholding vehicle

Following consultation, the government has decided not to proceed with the proposals from the Office of Tax Simplification (OTS) for a new employee shareholding vehicle aimed at unquoted companies. This was in part because the responses did not indicate there is significant demand from those most likely to use and benefit from the employee shareholding vehicle, and advisers appeared sceptical about whether the new vehicle would significantly reduce the need for specialist tax advice or necessarily increase employee share ownership.

IHT avoidance through multiple trusts

New IHT anti-avoidance rules bringing into charge property added to multiple trusts on the same day will apply to all relevant property trusts created on or after 10 December 2014, the government confirmed in last week’s draft Finance Bill and in response to the HMRC consultation on IHT trust charges. The rules on IHT exemption relating to appointments for the benefit of the deceased’s surviving partner will be relaxed for all deaths on or after 10 December 2014. The calculation of trust charges is being simplified by removing the need to include non-relevant property in calculations from 6 April 2015. The government has decided to not split the nil-rate band for trusts.

Draft regulations on maternity allowance NIC

HMRC has published draft regulations under powers in the National Insurance Contributions Bill, which will allow payment of class 2 NIC in advance of the submission of a self-assessment return for the purposes of maternity allowance with effect from April 2015.

CGT negligible value claims and farmers’ single payment scheme

HMRC has published Revenue and Customs Brief 48/2014: negligible value claims and Common Agricultural Policy reform. As part of EU Common Agricultural Policy (CAP) reforms, farmers’ single payment scheme is to be replaced with a new scheme from 1 January 2015. In Northern Ireland, Scotland and Wales, HMRC regards single payment scheme payment entitlement as having become of negligible value on 16 May 2014 and will accept negligible value claims on or before 31 December 2014. In England, the single payment scheme payment entitlement continues in the new scheme and will not be of negligible value. The milk quota system is also being phased out and will cease to exist on 31 March 2015. Individual units of milk quota should be pooled and any negligible value claim made to HMRC on or before 31 March 2015. If no negligible value claim is made, the ending of payment entitlement and milk quota will give rise to an allowable capital loss.

Bill update

  • Taxation of Pensions Bill 2014-15: This Bill had its second reading in the House of Lords – this was general debate on all aspects of the Bill – and all remaining stages took place on 16 December. Royal assent is expected on 17 December..
  • National Insurance Contributions Bill 2014-15: A line by line examination of the Bill took place during committee stage on 15 December. Amendments discussed covered clauses 1, 3 and 5 of the Bill. The report stage – further line by line examination of the Bill - is scheduled for 6 January.
  • Stamp Duty Land Tax Bill 2014-15: This Bill makes provision for the removal of the slab system of SDLT for residential properties, as announced in the Autumn Statement. The House of Commons agreed for the Bill to be considered by Committee of the whole House. The Bill will next be considered on the floor of the House on a date yet to be announced. The Bill passed its second reading debate on 10 December 2014. This government Bill was presented to Parliament on 4 December 2014. This is known as the first reading and there was no debate on the Bill at this stage.
  • Wales Act 2014: providing for full devolution of SDLT and landfill tax from April 2018, receives royal assent.

VAT: prompt payment discounts

HMRC has published a summary of responses to its consultation on implementing changes to VAT accounting for prompt payment discounts (PPD). HMRC agrees that businesses should not be required to issue credit notes when there is a reduction in consideration because a PPD is taken up. It considers that the suggested use of a single invoice setting out the terms of the PPD together with other documentary evidence to prove the price paid and the date of payment, e.g. a bank statement, is a sensible way forward. HMRC will have no objection to businesses operating in this way if they choose to do so and will issue a Revenue and Customs Brief containing guidance on this shortly.

Tobacco levy consultation

HM Treasury is consulting until 18 February 2015 on whether to introduce a new levy on tobacco manufacturers and importers, based on market share, and whether this should be brought within the corporation tax system. The consultation explores methods by which the government would set a revenue target for the levy.

ATED relief declaration return

Following consultation, the government is to introduce a new class of ATED return, the ‘relief declaration return’, in draft FB 2015 in respect of properties eligible for relief. An ATED return will still be required for properties with an ATED liability. The filing deadline for the first relief declaration returns will be extended to 1 October 2015 instead of the normal filing date of 30 April 2015. Legislation in FB 2015 will also lower the company’s interest threshold to £250,000 for the aggregation rule to apply to properties valued up to £2m.

DTR orders: Canada and Tajikistan

The Double Taxation Relief and International Tax Enforcement (Canada) Order, SI 2014/3274, will bring into effect the arrangements set out in a protocol and an interpretative protocol, signed on 21 July 2014, amending the UK/Canada double taxation convention. The protocols have not yet entered into force. The Double Taxation Relief and International Tax Enforcement (Tajikistan) Order, SI 2014/3275, will bring into effect the new UK/Tajikistan double taxation agreement and protocol, signed on 1 July 2014. This agreement has not yet entered into force.


Issue: 1244
Categories: News