Autumn Statement 2013 made by the UK Chancellor of the Exchequer, George Osborne: overview of tax announcements
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Autumn Statement 2013 made by the UK Chancellor of the Exchequer, George Osborne: overview of tax announcements

The Autumn Statement 2013 was made by the Chancellor of the Exchequer, George Osborne on Thursday 5 December. The statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.

 

Key rates

  • Corporation tax – 21% from 2014, 20% from 2015
  • VAT – 20%
  • Capital gains tax – 18% for basic rate taxpayers, 28% for higher rate taxpayers.

 

Key tax announcements:

1. Changes To The Capital Gains For Non-Residents Disposing Of UK Residential Property

From April 2015 a capital gains tax charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published in early 2014 

 

2. Anti-Avoidance/ Tax Raising Measures:

2.1. Changes to the Controlled Foreign Company (CFC) finance company exemption provisions.

From 1 January 2013, under the Finance Company Exemption, a UK group will be able to use an overseas finance company to lend to other foreign subsidiaries and pay UK tax on the interest income at an effective rate of mere 5.5 %. The Government has announced two changes to this provision.

The first change will stop UK companies which transfer profits from existing intra group lending out of the UK into an offshore CFC from benefiting from the CFC finance company exemption provisions.

The second change is to stop groups benefitting from the exemption if funds borrowed in the UK are used to any extent to repay non UK debt via an offshore CFC.

The measure will have effect on or after 5 December 2013.

 

2.2. Avoidance schemes using total return swaps

The measure blocks avoidance schemes where deductions are claimed for payments between companies in the same group under derivative contracts which are linked to company profits. It will apply from 5 December 2013 to schemes entered into on any date.

 

2.3. Double Taxation Relief: revenue protection

The measure will make changes to the Double Taxation Relief rules to reinforce the UK’s current policy that relief for foreign tax should only be available where income has actually suffered double tax in the UK and in another jurisdiction. It will have effect on or after 5 December 2013.

 

2.4. Follower Penalties: users of failed avoidance schemes

This measure will introduce new powers requiring taxpayers to amend their tax returns in cases where a tax avoidance scheme they have used has been shown not to work in another party's litigation, and to face a new penalty if they pursue litigation on the same scheme and are likewise unsuccessful. It will apply from presumably April 2014.

 

2.5. Accelerated tax payment in avoidance cases

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. This will take effect from Royal Assent which is expected mid July 2014.

 

2.6. Offshore evasion strategy - enhancing penalties

In early 2014 HMRC will launch a project to ensure it is ready to exploit data under the new exchange of data agreements, as well as to enhance penalties for those who hide their money offshore. 

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