Part of the Budget papers included a paper headed “Guidance on avoidance schemes involving the transfer of corporate profits” – at first glance, it looked like guidance on the total return swap scheme that was blocked in December 2013. But … it goes a bit further.
On a quick skim through the Budget papers, IP tax impact of the Budget is as follows:
– R&D repayable tax credit for SMEs going up to 14.5% from 11% for expenditure on/after 1 April 2014: means the government will contribute (in effect) 32.625% of R&D expenditure for loss-making SMEs. Might be time-limited, as the Impact Note seems to suggest no cost to the Exchequer from 2016-17, but that might just be that they haven’t worked out the figures.
– video games tax relief being tweaked to make it EU compliant, and to clarify that separate trade requirement is only for games for which relief is claimed. Similar point for tv relief – only programmes for which relief is claimed need to be treated as separate trades.
– theatrical production tax relief to be introduced, with consultation coming soon on the design of the relief (do any theatre companies actually make a profit for which they could get tax relief? I may be being cynical …)
– introducing an exemption from insurance premium tax for insuring certain risks relating to space satellites (the mind boggles …)
– update to tax rules to prevent duplicate capital gains relief on reinvestment of gains on disposal of tangible assets into the acquisition of an intangible fixed asset (pre-19th March 2014 claims to be adjusted when calculated future tax impact); there’s arguably a drafting error in CTA 2009 that could lead to double tax relief, although HMRC are “confident that the courts would recognise [it] as a drafting error”.
– R&D allowances to be excluded from the loss-buying anti-avoidance rules: sorting out a snafu in last year’s Finance Act, rather than a radical change.
– annual investment allowance going up to £500k until December 2015: applies to all businesses, not just those with IP. Mostly political posturing, as not all that many businesses spend more than the current £250k allowance on plant & machinery etc during the year (annual investment allowance enables expenditure on these items to be deducted in full on purchase, instead of being deducted in tranches over several years). When originally introduced, the allowance was £50k and was considered to cover the annual qualifying expenditure of over 95% of all UK businesses. So a £500k limit isn’t going to make much difference to the majority of businesses.
– capital gains tax relief on reinvestment in SEIS shares will be made permanent: applies to all start-ups, and is intended to make investment more attractive (investors get income tax relief and capital gains tax relief on the investment).
– online (and other remote) gambling will be subject to UK gambling taxes if aimed at UK customers