January 21, 2011
The Government has released draft provisions that may be included in the Finance Bill 2011. This article highlights some of these potential provisions. Pensions – Holders of defined contribution policies could be given more flexibility through the abolition of the rule requiring them to purchase an annuity by the age of seventy-five. There may also be a limit on direct draw downs of 100% of the equivalent annuity. Corporation Tax and Associated Companies – The rules that require a company’s profits to be accumulated with those of other companies with which it is associated for the purposes of calculating the rate of corporation tax to be paid by the company may be relaxed. The suggestion is that the rules would only catch associated companies where there is a substantial amount of commercial interdependence. Taxation of foreign profits – Proposals are to enable companies operating abroad to choose to be exempt from UK tax on the profits of their overseas branches and to widen the exemptions from the controlled foreign company regime which taxes the UK parent company on its share of the profits of the controlled foreign company and restricts certain activities such as intra-group transactions. Simplification of chargeable gains – The Government has been consulting for some time to make the calculation of corporation tax more simple and straightforward. Such proposals include simplifying the rules governing capital losses, value shifting and the de-grouping charge. The Finance Bill is due to be published in full on the 31st March following budget day on 23rd March.