Finance Bill 2011 unveiled
10 Dec 10
Few surprises, as Osborne sets out pension changes, overseas profit taxation reform and new avoidance measures
The Coalition Government has published draft legislation for its Finance Bill 2011, much of which draws on the numerous consultation exercises it has initiated since coming to power.
Key proposals include scrapping the obligation for pensions to buy an annuity at age 75. To prevent individuals drawing down their entire pension pot, then falling back on the state, all but the biggest savers will be subject to an annual drawdown limit equal to the equivalent annuity.
The rules covering taxation of “related companies” have also been relaxed, to allow small businesses to enjoy preferential tax rates unless they are substantially commercially interdependent with another entity.
New interim measures in the ongoing reform of the “Controlled Foreign Company” (CFC) regime aim to make the UK a more attractive business location, while protecting the tax base. The changes include additional exemptions from the CFC, as well as a permanent “opt-in” exemption from UK tax on the profits of a company’s overseas branches.
The Bill also puts into action the previous Government’s drive to simplify the taxation of companies’ chargeable gains, particularly in the calculation of capital losses where there has been a change of ownership and in the “degrouping charge” rules.
New anti-avoidance rules have made the headlines ahead of the draft Bill’s release and include measures to tackle abuse of corporate tax rules in the first instance, with a General Anti Avoidance Rule (GAAR) to follow.
Finally, the Bill would enact several measures first announced in June’s emergency budget, including a reduction in corporation tax, a reduction in the Annual Investment Allowance and changes to the tax treatment of employer-supported childcare schemes.