Business Politics
Currently profit/loss allocations of LLPs can be allocated amongst all members as they so wish. The consultation will look at measures to counter the perceived manipulation of profit/loss allocations to secure tax advantages which could be achieved through the differing tax rates which apply to, for example, corporate and individual members.
has paid £2,000 for the shares, thus ensuring the first £2,000 of ‘employee shareholder’ shares is exempt from income tax and NIC. The legislation will also ensure that the buy-back of CGT-exempt shares will not be taxed as a distribution.
These changes go some way to addressing some of the key concerns which were expressed about the CGT exempt shares. However, capping the income tax and NIC exemption at £2,000 is disappointing and will not necessarily encourage the wide take-up of employee shareholder employment status.
As a response to the Nuttall Review, the Government intends to introduce a further CGT relief next year for the sale of a controlling interest in a business into an employee-owned structure. BIS is developing an ‘off-the-shelf’ structure for employee ownership and this measure will be introduced alongside it. Widening the availability of CGT relief could encourage owners
to part more easily with controlling interests to employees.
As might be expected it wasn’t all good news and there were some worrying developments for businesses and individuals.
Firstly, there is to be a consultation on how members of limited liability partnerships (LLPs) are taxed, which could result in yet more complications for firms to wrestle with. The plan is to introduce new rules with effect from 2014 and in the meantime a consultation will cover the use of an LLP to disguise employment relationships and the artificial allocation of profit/loss. Under current legislation, members of an LLP are regarded as self-employed and, as such, no employer’s national insurance contributions are paid on their profit share. The consultation will specifically concentrate on measures to remove the presumption of self-employment where an LLP has been used to disguise employment relationships.
The second issue concerns the ability to offset loans against the assets chargeable to inheritance tax (IHT) on death - this came out of the blue and will not be subject to consultation. It has been common practice for many years for the borrowing used to acquire assets that will qualify for IHT business property relief or agricultural property relief to be secured against other assets that will be liable to IHT in full. For example, when making a loan to an individual for the purpose of buying a new business the bank may prefer to take a charge against the family home. The new rules will require the borrowing to be matched with the asset
acquired thereby
resulting in potentially significant extra IHT liabilities for farmers and business owners. All this conjures up a vision of farmers marching on Whitehall, with muck spreaders bringing up the rear.
For further information on the Budget visit Smith & Williamson’s dedicated webpages at
www.smith.williamson.co.uk/ budget-2013 or contact Richard Mannion on 020 7131 4252, or email richard.
mannion@smith.williamson.co.uk.
Disclaimer By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Article correct at time of writing.
Smith & Williamson LLP Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.
39 entrepreneurcountry
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58