Policy News Journal - 2012-13

Below is a summary of the Personal Tax elements. Full details and all relevant material has been published on the HM Treasury website .

Income tax basic rate limit and personal allowance 2013-14 –the basic rate limit will be set at £32,010 and the income tax personal allowance for those born after 5 April 1948 at £9,440 for 2013-14. These amounts supersede the corresponding amounts announced at Budget 2012.

Tax status of Universal Credit –Universal Credit will become exempt from income tax. Awards of Universal Credit will start during the 2013-14 tax year.

Cap on unlimited tax reliefs –there will be a cap on unlimited income tax reliefs to the greater of £50,000 or 25 per cent of income.

Statutory residence test – a statutory residence test will be provided for individuals from 2013-14. The legislation will also provide for a tax year to be split into a UK part and an overseas part in certain circumstances, and contain new rules for the taxation of certain income and gains arising during a period of temporary non-residence. Ordinary residence –the concept of ‘ordinary residence’ for tax purposes will be eliminated as far as possible. In particular, overseas workday relief, which is accessed by remittance basis users who have been non-resident for three tax years and come into the UK whilst retaining some duties abroad, will in future apply for a fixed period, regardless of whether or not the individual intends to settle in the UK. Statement of practice 1/09 (SP1/09) – As proposed in the June 2011 document, Reform of the taxation of non-domiciled individuals: a consultation , legislation will be introduced to put SP1/09 on a statutory basis. Capital gains tax: exemption for gains on disposals of ‘employee shareholder’ shares – a new employment status will be created, to be known as the ‘employee shareholder’ status. Individuals adopting this status will receive a minimum of £2,000 worth of shares. Legislation will be introduced from 6 April 2013 to exempt all gains made on disposals of up to £50,000 worth of ‘employee shareholder’ shares from capital gains tax. Review of tax advantaged employee share schemes – legislation will be introduced to give effect to the Office of Tax Simplification’s proposals to simplify aspects of the tax advantaged employee share schemes: Share Incentive Plans, Save As You Earn Option Schemes, Company Share Option Plans and Enterprise Management Incentives. Personal services companies and IR35 – Following the consultation on the ‘ Taxation of Controlling Persons ’, the government has decided not to proceed with this proposal. Instead, legislation will be introduced to put beyond doubt that the intermediaries legislation (IR35) applies to office holders for tax purposes. Expenses of members of devolved administrations – legislation will be introduced to provide a statutory exemption from income tax for certain travel expenses paid to members of the three devolved administrations by the Assembly or Parliament. Pensions tax relief – the standard lifetime allowance will be reduced to £1.25 million for the 2014-15 tax year onwards. Transitional protection (fixed protection 2014) will be introduced to provide individuals with a lifetime allowance of £1.5 million subject to certain conditions. The annual allowance will also be reduced to £40,000 for the 2014-15 tax year onwards. Enterprise Management Incentives (EMI) – capital gains tax entrepreneurs’ relief will be extended to shares acquired through the exercise of EMI share options.

CIPP Policy News Journal

12/04/2013, Page 160 of 362

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