Positives and negatives
Tony Spillett, Tax Partner at BDO, reports:
With the publication on 6 December of a considerable amount of draft legislation, the Government maintained its commitment to provide details of intended tax changes at least three months in advance.
The further detailed proposals for reduced corporation tax rates, taxation of intellectual property and changes to the taxation of foreign profits and Real Estate Investment Trusts bear out the Government's intention to make the UK corporate tax system the most competitive in the G20. The corporate measures are complemented by a new relief for non-domiciled individuals wishing to remit funds to invest in UK businesses.
Domestic investment in business is also encouraged with various tax measures improving and adding to the existing venture capital schemes, together with improvements to tax relief for research and development and the prospect of 100% first year allowances in some of the new enterprise zones.
Finally, the drive to simplify and modernise the domestic UK tax system continues, with draft legislation on a wide range of issues, 'tidying up' some areas, preventing avoidance in others, and providing new charitable reliefs.
All of this positive news was however counter-balanced by some negatives:
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• It is disappointing that the long-awaited statutory residence test, which will be an important step in bringing greater certainty on the residence position of individuals, will not now come into effect until 6 April 2013
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• The UK's tax legislation will be longer, much longer, following the enactment of the draft clauses (over 1,000 pages of material was released)
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• The enterprise-inhibiting consequences of the 50% rate of income tax continue unchecked.
Whilst there were no great surprises or headline-grabbing measures, some of the announcements will be important to businesses and individuals.
BDO has produced an update which focuses on the main announcements and their relevance to you and your business. You can download it in full here.
We look forward to the next major instalment in Budget 2012 but if you have any questions in the meantime on how you might be affected by these announcements please do not hesitate to contact your usual BDO adviser or me.
