Venture Capital Trusts
Share buybacks carried out by Venture Capital Trusts (VCT) will no longer qualify for tax relief from April 2014. The Autumn Statement revealed that any investments linked to a VCT share buyback or made within six months of selling shares in the same VCT will not qualify for tax relief.
Tax Avoidance Schemes
A new information disclosure and penalty regime for high risk promoters of avoidance schemes will be introduced. Objective criteria for identifying high risk promoters and a higher standard of reasonable excuse and reasonable care that will then apply to them will also be introduced. Clients of these promoters will also have certain obligations including identifying themselves to HMRC.
Legislation will be included in Finance Bill 2014 to require payment of the tax in dispute in a tax avoidance enquiry when an ‘avoidance follower penalty notice’ is issued. At present taxpayers (in most cases) can hold on to the disputed tax while the dispute is being investigated. This will take effect from Royal Assent which is expected mid July 2014.
The maximum allowance that can be saved in a tax-free Individual Savings Account (ISA) will rise from the current £11,520 to £11,880 in April 2014. Half of this can be invested in a cash ISA, with the rest or the total amount able to go into a stocks and shares ISA.
The annual subscription limit for Junior ISA and Child Trust Fund (CTF) for 2014/15 will increase from £3,720 to £3,840.
For Share Incentive Plans, the individual limits on the ‘free’ shares companies can award to employees for 2014/15 will be increased from £3,000 to £3,600 per year and the individual limits on the ‘partnership’ shares employees can purchase will be increased from £1,500 to £1,800 per year (or 10% of an employee’s annual salary).
For Save as You Earn (SAYE) the amount that employees can save and apply towards the purchase of shares for 2014/15 will be increased from £250 to £500 per month.
Income Tax Personal Allowance
People born after 5 April 1948 will be entitled to a basic personal allowance of £10,000 for 2014/15. The ‘higher rate threshold’ (the sum of the basic personal allowance and the basic rate limit) will be £41,865. As the personal allowance will be £10,000 for 2014/15, this means that the basic rate limit will be £31,865. The rates of tax will be announced in the 2014 Budget.
There has been consultations about the taxation of partnerships and the first element of the partnerships review measure will affect mixed membership partnerships where partnership profits are allocated to a non-individual partner in circumstances where an individual member may benefit from those profits.
The second element will affect cases where partnership losses are allocated to an individual partner, instead of a non-individual partner, to enable the individual to access certain loss reliefs. The changes will take effect from 6 April 2014 with the exception of anti-avoidance rules concerning tax-motivated profit allocations. These rules come into force from 5 December 2013 in order to protect against risks to tax revenue.