In a move towards simplification of the UK tax system, the Office of Tax Simplification (OTS) has reviewed over 1,000 tax reliefs with a view to removing those considered to be either obsolete or no longer achieving their planned objectives.
By March this year the OTS had narrowed their list down to 43 tax reliefs that it proposed should be abolished. Despite expressions of concern from tax advisers and professional bodies, there was nothing in George Osborne’s Autumn Statement to suggest that the Government has had a change of heart with regards to the proposed changes.
Whilst the abolition of many of the reliefs, such as 15p luncheon vouchers, is unlikely to affect many businesses or individuals, there are a number of changes that may be of significance.
Key Reliefs to be abolished
- Late night taxis - Currently the provision of occasional taxis by an employer in order for an employee to travel home from work after 9pm is not treated as a taxable benefit in kind.
- Welfare counselling - Welfare counselling on issues such as bereavement or stress provided by employers to employees is currently not treated as a taxable benefit in kind.
- Flat conversion allowance - This relief provides for generous tax relief on the conversion of empty spaces above commercial premises into residential dwellings.
- Land remediation relief - This relief for companies provides a generous corporation tax deduction for expenditure on works to clean up contaminated land, including asbestos removal.
- Life assurance premium relief - For policies entered into prior to March 1984 it has been possible to claim tax relief on the premiums.
Reliefs to be retained
On the plus side, the OTS has recommended that the following popular tax reliefs be retained:
- Employer supported childcare - This includes both directly supported childcare and childcare vouchers, although tax relief for higher rate and additional rate taxpayers has been restricted for employees entering a scheme for the first time after April 2011.
- Cycle to work scheme - Employers can provide bikes and safety equipment for employees to use mainly for journeys to work as a tax free benefit.
Announcements in the Autumn Statement
George Osborne announced the following changes to tax reliefs in the Autumn Statement:
- Small business rate relief holiday (SBRR) to be extended - The SBRR has been extended for a further six months, to 1 October 2012, providing 100% relief from business rates for business properties with a rateable value of up to £6,000, with tapered relief for rateable values up to £12,000.
- Gifts of pre-eminent objects - This measure allows taxpayers to offset some or all of their income tax, corporation tax or corporation tax by donating ‘pre-eminent’ objects to the nation.
- No extension of Stamp Duty Land Tax holiday for first time buyers - There was no extension to the Stamp Duty Land Tax (SDLT) holiday for first time buyers which removes SDLT on property purchases up to £250,000 for first time buyers for purchases before 25 March 2012.