2012 Budget Breakfast DAVID COLLIER 22 March 2012

Income Tax  50% rate reduce 45%: 6 April 2013  Planning for reduced rate  Timing of dividends/ bonuses  Timing of deductions  Timing of trading income  Long term prospects? 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 2

Income Tax (contd)  RAT: 50% to 45%  Car/ fuel benefits: further increases  Personal allowances: increase  PA: unavailable income > £100,000  Age allowances: phased out 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 3

Income Tax Reliefs Capping  6 April 2013  Income tax only  Reliefs limit: 25% of income, but always first £50,000  Excludes: EIS/ VCT/ pension  Covers: trading losses etc?  Scant details  Planning ideas to follow! 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 4

Child Benefit  Reduced benefit: over £50k  No benefit: over £60k  7 January 2013  Opt out of benefit?  Receive full benefit: claw back through self assessment?  Higher earner pays claw back charge 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 5

Charitable Giving  Reduced rate of IHT  10% of estate liable to IHT gifted to charity  IHT rate reduced from 40% to 36%  inform summary  Careful implementation needed 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 6

Corporation Tax Rates from 1 April in the year 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast % % % % 2015?

Capital Allowances  Long term reduction in allowances  25% to 2008, 20% to 2012, now 18%  Reduced rate: long life and building plant: 10% to 8%  Solar equipment in reduced rate category 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 8

Capital Allowances (contd)  Important change for building purchasers  Buildings contain plant items  Many claims not made  HMRC concern over late claims  Seller must claim allowances  Sellers and purchasers must agree allowances being transferred  1/6 April 2012 start date 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 9

Investor Tax Incentives  SEIS: Micro businesses  EIS/ VCTs: more coverage 10 IMPROVED NEW Improved 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast

SEIS  Micro start ups  50% income tax relief  CGT exemption  Inform summary 11 Limited Offer 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast

SEIS What is “SEIS”?  Six, in Portuguese  Seven, in Livonian  A tax relief that can reach 103%  Stop, in Finnish 12 Edinburgh Chamber of Commerce Budget Breakfast 22 March 2012

EIS/ VCTs  £1m investor annual limit  250 employees;£15m assets; £10m annual limit March 2012 Edinburgh Chamber of Commerce Budget Breakfast

Employee Incentives  EMI limits: £120k to £250k  Date to be set  ER: post 6 April 2012 exercises  OTS review 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 14 Key

GAAR  General anti avoidance rule  Aaronson: general anti abuse rule  Consultation  Finance Act 2013  Effect for partly completed arrangements 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 15

GAAR (contd)  Protection for reasonable tax planning  “Reasonably regarded”  “Reasonable exercise of available choices”  Aimed at wholly artificial schemes  No general clearance procedure  Add to current specific clearances 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 16

GAAR (contd) Who or what is “GAAR”?  The authoress of “Women in Rock & Roll”  A place in Oklahoma, USA  A Russian skater  The latest weapon against artificial tax planning 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 17

GAAR (contd) What organisation links the following proposed changes to the tax rules on connected party loan relationships?  “We reinforce our business integrity every day by striving to improve the service we provide; making responsible decisions in how we manage the business; and actively managing the social and environmental impacts of what we do”  "They have got caught”  "This will add a couple more years to the brand rejuvenation" 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 18

GAAR (contd) Which of the following statements are TRUE and which are FALSE:  The 2010/11 edition of Tolleys Yellow Handbook has more than 14,000 pages  The 1978/79 edition of Tolleys Yellow Handbook had less than 5,000 pages  The Indian Direct Tax Code, a recent consolidation of their tax rules, is less than 500 pages  The Indian Direct Tax Code, a recent consolidation of their tax rules, is more than 15,000 pages 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 19

Pension Auto Enrolment  Start October 2012  Key amounts? £8,105, £5,564, £39,853  Financial cost: employer/ employee  Review existing arrangements  Compulsory pensions: % of band earnings of total pay  Pension schemes: % of whole of basic pay  Ongoing admin: forms, forms and more forms  Scheme provider: NEST? 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 20

Pension Auto Enrolment (contd)  Which of the following are true about NEST, the government sponsored pension provider?  The government estimates that between 3m and 6m individuals will join NEST.  The pensions industry does not believe that between 3m and 6m individuals will join NEST.  If NEST achieves only low volumes of joiners then it could have to borrow up to £1.2bn to funds its operations.  NEST will offer investment advice.  NEST will allow transfers to other schemes if you are unhappy with their service.  The IT administrators of NEST have wide experience of similar schemes. 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 21

Which of the following were NOT tax collectors?  Robert Burns, the poet  PD James, the writer  Bob Diamond, the banker  Sue Johnson, the actress  Thomas Paine, American revolutionary  All of you! 22 March 2012 Edinburgh Chamber of Commerce Budget Breakfast 22

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