The Autumn Statement gave us a flavour of what to expect when the legislation is published on 10 December. Here’s a summary.
Private residence relief
Capital gains tax relief under section 222 to 226 TCGA 1992 contains provisions to provide relief from the gain on the sale of a person’s only or main residence. At present, if a person buys another residence there is relief from tax for the last 36 months of ownership, even if another home has been purchased. From April 2014, this period of 36 months is to be reduced to 18 months.
The government will introduce a tax on future gains made by non-UK residents disposing of UK property from April 2015. A consultation on implementation of this will be published early in 2014.
The government will introduce three new reliefs to encourage and promote indirect employee share ownership:
- from April 2014, disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from CGT
- transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax
- from October 2014, bonus payments made to employees of indirectly employee-owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.
Share incentive plans and save as you earn limits
The share incentive plan annual limits will increase to £3,600 per year for free shares and to £1,800 per year for partnership shares. The maximum monthly amount that an employee can contribute to save as you earn savings arrangements will increase from £250 to £500. These changes will take effect from April 2014.
Inheritance tax and trusts
‘Simplification’ of trusts: the government will legislate to simplify filing and payment dates for IHT relevant property trust charges. It will also legislate to treat undistributed income which remains undistributed for five years as part of the trust capital when calculating the 10 year periodic charge. It will consult on proposals to split the IHT nil-rate band available to trusts with a view to delivering this change alongside the simplification of trust calculations in 2015. This could defeat the object of simplification in the case of multi-settlor trusts.
Vulnerable beneficiary trusts:with immediate effect from 5 December 2013, the CGT ‘uplift’ provisions will apply on the death of a vulnerable beneficiary. From 2014-15, the range of trusts will be extended to include those that qualify for special income tax, CGT and IHT treatment and the government will consult on further reforms.
ACCA will provide more in-depth analysis of employee ownership in the 20 December issue of In Practice.