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Cap on income tax reliefs from April 2013

From 6 April 2013, the relief available on certain (currently unlimited) income tax reliefs will be subject to a cap of £50,000 or 25% of income, whichever is higher. The main reliefs affected will be trade and property loss reliefs and qualifying loan interest relief.

The following income tax reliefs are the main ones that will be affected:

  • Trade loss relief against general income – losses made by an individual carrying on a trade, profession or vocation.
  • Early trade losses relief – losses made in the first four years of a trade.
  • Property loss relief against general income – property business losses arising from capital allowances or agricultural expenses.
  • Share loss relief on non-Enterprise Investment Schemes/Seed Enterprise Investment Schemes shares – capital losses on the disposal (or deemed disposal) of certain qualifying shares available to be set against income.
  • Qualifying loan interest – interest paid on certain loans, including loans to buy qualifying shares or to invest in a partnership.

However, it is worth noting that the limit will not apply to charitable reliefs i.e. Gift Aid, relief for gifts of land and shares to charity, payroll giving and Community Investment Tax Relief.

The cap will apply to losses for 2013/14 onwards.

If you have any questions or would like to discuss the cap on income tax reliefs further, please do not hesitate to contact Cathy Corns or your usual Mercer & Hole contact.

Corporation tax rates

Just to clarify the position following all the different announcements we can confirm that the main corporation rates are:

    23% from 1 April 2013

    21% from 1 April 2014

    20% from 1 April 2015

This means that from 2015 there is no distinction between large and small companies and no impact on the rate of corporation tax from associated companies.

We will have to examine the eventual legislation and guidance about payments in advance by quarterly installments, which currently attach to payments at the full rate.



Date: 9th April, 2013
Author: Cathy Corns


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