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Consultation on Tax Relief 09/07/12

A Government consultation, due to end on the 5 October 2012, for views on its proposal to cap income tax relief from April 2013 in an effort to stop wealthy individuals from using tax breaks to avoid tax.

The 2012 Budget announced the parameters to be set at £50,000 or 25% of an individual’s income - whichever is greater. The aim is to stop individuals from reducing their income tax bills to zero by using these income tax reliefs “to excess.”

The cap will apply to 10 types of relief:

  • Trade loss relief against general income
  • Early trade losses relief – available for losses made by an individual carrying on a trade, profession or vocation
  • Post-cessation trade relief – available to an individual in the first four years of the trade, profession or vocation
  • Property loss relief against general income – available for qualifying payments or qualifying events within seven years of the permanent cessation of the trade.
  • Post-cessation property relief – available for property business losses arising from capital allowances or agricultural expenses
  • Employment loss relief – available for qualifying payments or qualifying events within seven years of the permanent cessation of the UK property business
  • Former employees deduction for liabilities – available in certain circumstances where losses or liabilities arise from employment
  • Share loss relief – available for payments made by former employees for which they are entitled to claim a deduction from their general income in the year in which the payment is made
  • Losses on deeply discounted securities – available for what would otherwise be a capital loss on the disposal (or deemed disposal) of certain qualifying shares
  • Qualifying loan interest – available only for losses on gilt strips and on listed securities held since at least 26 March 2003 and available for interest paid on certain loans. These include loans to buy an interest in certain types of company, or to buy an interest in a partnership, and loans taken out by personal representatives to pay inheritance tax

As previously announced, the government has dropped plans to limit tax relief on charitable giving after protests from charities.

If you need any help and advice on the implications of Tax Relief or general Taxation, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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