Draft 2012 Finance Bill

The draft 2012 Finance Bill was published today (Tuesday 6 December 2011). Here is a summary of the 10 main points and our tips and planning opportunities.

  1. Seed Enterprise Investment Scheme (SEIS) relief – further details have been announced following on from the Autumn Statement with regard to the limits and criteria both for the individual investor and the company.
  2. Capital Allowances – the Government is proceeding with changes to ensure buyers and sellers of commercial property agree, within two years, the amount available for capital allowances. Purchasers of commercial property should ensure they seek a capital allowance review immediately before such a review is time barred. Furthermore, the Annual Investment Allowance will reduce from £100,000 to £25,000 from April 2012 so, where possible, items of capital expenditure should be bought prior to April 2012.
  3. Research & Development Tax Relief – confirmation that generous changes to the relief will go ahead. The SME relief enhanced rate will increase from 200% to 225%, the PAYE and NIC cap on the repayable credit will be abolished and the £10,000 minimum spend will also be abolished. All to apply from April 2012. A new method of relief, known as “Above the Line” will be brought in during 2013 for larger companies.
  4. Inheritance Tax Nil Rate Band – the nil rate band, currently £325,000 will be frozen at this level until 2015 at which point it will increase in line with the Consumer Price Index (CPI). Now might be a good time to carry out an Inheritance Tax Review.
  5. Patent Box – draft legislation for the new 10% Corporation Tax rate for income from UK and EU patents has been published. The new rate will be phased in from April 2013.
  6. Strike Off of Companies – companies that are informally struck off can apply to treat distributions as capital distributions by Extra Statutory Concession. This concession will be legislated for and, from 1 March 2012, such distributions will only attract capital treatment if they total £25,000 or less. Act now to obtain favourable tax treatment for unwanted companies.
  7. VAT Online Filing – with effect from 1 April 2012 all VAT registrations and VAT returns must be filed online.
  8. Land Remediation Relief (LRR) and Flat Conversion Allowance – LRR: this generous but often overlooked enhanced corporation tax relief for qualifying costs on the removal of harmful substances will not be abolished after all. However, the 100% Flat Conversion Allowance will be abolished in April 2013. Time is therefore running out to make a claim for this relief.
  9. Statutory Residence – due to the issues raised in responses to the consultation, the Government has announced that it will legislate the statutory residence test in 2013, rather than April 2012. It will introduce any reforms to ordinary residence at the same time.
  10. Charitable Gifts from Estates– the Government has confirmed, after consultation, that it will introduce a measure which will introduce a  lower rate of Inheritance Tax (IHT) of 36% where 10% or more of a person’s net estate is left to charity.  This will apply to all deaths after 6 April 2012. The 10% will be based on the value of the Estate after deducting IHT reliefs, exemptions and the Nil Rate Band and will be available by election on all assets within the Estate, not just the free Estate

If you have any questions on the draft 2012 Finance Bill, get in touch with our experts today:

West Region;
Bob Wheatcroft, Partner and Head of Tax - bob.wheatcroft@armstrongwatson.co.uk 
or call 01228 690200
Graham Poles, Tax Director - graham.poles@armstrongwatson.co.uk 
or call 01228 690200
Nigel Holmes, Corporate Tax Directornigel.holmes@armstrongwatson.co.uk
or call 01228 690200

East Region;
Steve Roberts, Tax Director - steve.roberts@armstrongwatson.co.uk
or call 0113 2211 300

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