Autumn Statement 2013 predictions

Capital gains tax charge on foreign owners of UK real estate looks likely to feature in the Autumn Statement, and the central questions are: will the changes take effect on 6 April 2014, or immediately; will there be provision for rebasing the property’s value; what mechanisms will be used to ensure compliance; will estate agents or solicitors dealing with conveyancing be obliged to withhold a share of the proceeds of sale to ensure payment of tax; will there be special dispensation to allow non-resident owners to elect for principal private residence relief in relation to their main residence, despite being outside the usual two-year time limit to do so? If non-resident owners are not permitted to select their UK second home as their main residence, then that would presumably be discriminatory and in breach of EU treaties.

Partnership taxation: the government has sent out warning signals on misuse of partnership rules to avoid national insurance contributions (in other words, by promoting employees to junior partnership) and the manipulation of profit or loss allocations by some partnerships to achieve a tax advantage.

Exactly how HMRC plans to prevent the manipulation of profit allocation is unclear. The perceived mischief is that profits are allocated to partners with lower rates of tax, usually a corporate, either providing for deferral, or allowing for a later reallocation of those profits to other partners, who would have paid higher rates of tax had they received the allocations directly…

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