Thursday 5 December 2013

Autumn Statement – Share plans for internationally mobile employees


Following the recent consultation process and recommendations of the Office of Tax Simplification, the Government  has announced that legislation will be introduced to reduce the complexity in determining the UK tax and social security treatment of share awards for internationally mobile employees. 

The liability to UK taxation for income realised from share awards will be based on the proportion of the total income that has accrued during a period when the employee worked in the UK.  It is understood that the new rules will apply from 6 April 2014 but we are not sure at this stage whether there will be any transitional provisions so we must await the draft of the proposed legislation.

This move will be widely welcomed as the current rules are extremely complex and the NIC treatment is often different from the tax treatment due to specific social security rules resulting from the EU Regulations or Social Security Agreements concluded with certain non-EU States.

Autumn Statement – £10,000 personal allowance election pledge


As widely expected, the Government has increased the personal allowance to £10,000 to take effect from 6 April 2014.  This represents an increase of £560 for basic rate taxpayers.

The basic rate tax band will be set at  £0 - £31,865 and the phase out of the personal allowance will still apply on taxable income over £100,000 per annum.

Autumn Statement – New Class 3A National Insurance Contributions to top-up state pension entitlement


The Chancellor announced today that from October 2015, eligible individuals will be able to pay the new voluntary Class 3A National Insurance Contributions.  As yet no rate for this new class of contribution has been announced but it will be set at an actuarial rate.

Under the current system, any individual who reaches state pension age before the introduction of the new single tier pension, continues to accrue entitlement under the existing rules whereby the basic state pension is £110.15 per week.  This top-up scheme will be opened in October 2015 and will enable certain pensioners and individuals who will reach state pension age before 6 April 2016 to buy increased entitlement to the state pension.   

This measure will be welcomed by those pensioners frozen out of the new single tier pension which is to be set at £144 per week and which applies only for those retiring after 6 April 2016.

Autumn Statement – Key changes to capital gains tax on UK residential properties


 

1.       As widely anticipated, the Chancellor has announced today that UK capital gains tax will be levied, from 6 April 2015, on gains made by non-UK residents disposing of UK residential property, regardless of value.

This brings the tax treatment of individuals in line with the treatment for non-UK resident corporate entities selling UK sited property of value over £2million after  6 April 2013.  It is anticipated that capital gains tax will now be extended to companies and other entities within the scope of the existing charge which sell a UK residential property of any value.

We have very little detail relating to these proposals at this stage and the Government has announced that it will be consulting on the measures with a consultation document then due out by April 2014.  Possible areas open for discussion are:

·         “re-basing”  by charging capital gains tax only on gains relating to the period from April 2015 to the date of sale

·         applying the capital gains tax charge only to properties acquired after April 2015 (highly unlikely in our opinion!)

 
2.       Currently, the last 36 months period of ownership of a principal private residence is treated as if it were the taxpayer’s main home, regardless of whether he lives there or owns another property.

The Chancellor has announced today that this exemption period is to be halved to just 18 months from 6 April 2014.  This could significantly increase some taxpayers’ capital gains tax liabilities if, for example, there is a delay in the sale of the property.
 
 
 If you require further advice on any capital gains tax issue or planning for future disposals,  then contact    ppeterson@petersonsims.com    or    gsims@petersonsims.com