UK: Weekly Tax Update - August 24, 2015

Last Updated: 27 August 2015
Article by Tina Riches

1 PRIVATE CLIENT

1.1 Dividend allowance update

HMRC has issued a factsheet explaining that the proposed 'dividend allowance' will not exclude up to £5,000 of dividend income from taxation, but be applied as a zero- rate of tax on the first tranche of dividend income.

Crucially, dividend income will continue to be taxed as the top slice of income but with the first £5,000 taxed at 0%. The zero-rated dividend income will remain 'taxable' income so will still need to be taken into account when considering how tax bands are utilised as well as allowances and charges based on total income.

Example

Take the position for someone in 2016/17 with non-dividend income of £40,000, receiving dividends of £9,000 outside of an ISA. The personal allowance is £11,000 and basic rate band £32,000.

www.gov.uk/government/publications/dividend-allowance-factsheet

2 PAYE AND EMPLOYMENT

2.1 First-tier Tribunal (FTT) decision on termination and restricted shares

In the case of Sjumarken v HMRC [2015] UK FTT 375 TC the FTT has ruled on a termination agreement that involved the lapse of options and the receipt of restricted shares. It confirmed that where restricted shares were received, the relevant value for employment tax purposes was their value as restricted rather than the full value.

Mr Sjumarken was made redundant by his employer BNP Paribas in October 2005. At redundancy, he was entitled to the release of shares under the company's share incentive plan. This plan was unfortunately named; confusingly, it was not a tax- advantaged HMRC approved share incentive plan, as they were then known, but taxable restricted shares.

HMRC argued that the shares had been released to him and therefore should be taxed on their full value, but he was able to demonstrate that the shares were in fact held in an account for him and could only be sold according to a timetable thus making them restricted shares for the purposes of the employment related securities legislation. This meant that on receipt he was taxable but only on the restricted value. The parties were left to agree the valuation on that basis between them.

In addition, Mr Sjumarken argued that he had surrendered some long dated options as part of his termination agreement. The offer he had received was increased materially during negotiation. He argued that their surrender could constitute negative earnings. The court did not accept that the reason for the increased offer could be ascribed to the 'surrendered' share options and in fact the options had already lapsed.

www.bailii.org/uk/cases/UKFTT/TC/2015/TC04557.html

3 BUSINESS TAX

3.1 HMRC issues Spotlight 25 on Stamp Duty Land Tax avoidance

Following the decision in the APVCO 19 Ltd and others HMRC has issued Spotlight 25 inviting users of SDLT avoidance schemes to approach them with a view to settling liability.

We reported on the Apvco 19 Limited case concerning SDLT avoidance and retrospective legislation in our Update of 6 July. As HMRC sets out in the Spotlight, the Court of Appeal rejected the taxpayers' breach of human rights argument, because the Government had clearly indicated that SDLT schemes could be the subject of retrospective legislation.

HMRC points out that it has a '100% record in defeating SDLT avoidance schemes'. It invites taxpayers to contact them to discuss how they can withdraw from their scheme and settle their liability. The point that HMRC implies, and is important for the taxpayer to bear in mind, is not so much that HMRC has a complete court record (it can always lose the next case) but that the Court of Appeal has again, in line with the Huitson case, accepted that retrospective legislation can be effective, as here, where the Government had explicitly warned of its possibility in the area.

www.bailii.org/ew/cases/EWCA/Civ/2015/648.html

www.gov.uk/government/publications/spotlight-25-stamp-duty-land-tax-avoidance-no- human-rights-breach-in-stamp-duty-avoidance-challenge/spotlight-25-stamp-duty-land- tax-avoidance-no-human-rights-breach-in-stamp-duty-avoidance-challenge

3.2 EU gives State Aid approval for 25% film tax credit on all qualifying expenditure

In the March 2015 Budget, the Government announced that it would further support the film industry by increasing the rate of film tax relief to 25% for all qualifying productions. Previously, the rate was 25% for the first £20 million of qualifying expenditure and 20% for spending above this threshold. The Government has announced that this change has received EU State Aid approval and will be backdated to apply from April 2015. Finance Act 2015 indicated the start date for the new rates, to cover films whose principal photography was not completed by that date, could not be before 1 April 2015.

www.gov.uk/government/news/chancellor-were-backing-british-film-industry

4 VAT

4.1 VAT reduced rate: installation of energy saving materials

HMRC has updated its Brief 13 2015 concerning energy saving materials following an adverse decision of the CJEU that the UK was implementing the relief too widely.

We reported the somewhat odd wording of this Briefing in our Update of 10 August 2015. The drafting has been sorted out and now explicitly agrees with the interpretation we gave at that time.

It now states:

If there are to be any legislative changes, they won't be implemented before Finance Act 2016. Until then, supplies of the installation of energy savings materials will continue to be reduced rated and any changes will only apply to future supplies and not to supplies already made.

www.gov.uk/government/publications/revenue-and-customs-brief-13-2015-reduced-rate- of-vat-for-the-installation-of-energy-saving-materials/revenue-and-customs-brief-13- 2015-reduced-rate-of-vat-for-the-installation-of-energy-saving-materials

4.2 VAT compulsory charge on single-use carrier bags in England

HMRC has issued Brief 14 2015: charging VAT on single-use carrier bags in England.

Regular readers will recall that we trailed the introduction of a compulsory charge on single use carrier bags in our Update of 19 January 2015.

As planned, this is to take effect from 5 October 2015 for suppliers with 250 or more full time equivalent employees.

Whether or not a VAT registered supplier comes within the scope of the compulsory charge, any amount charged for a bag is tax inclusive at the standard rate of VAT.

For corporation tax and income tax, receipts from the compulsory charge on single-use carrier bags should be brought into account in calculating trading profits.

The Brief comments that the Government 'expects the proceeds to fund good causes in England.'

www.gov.uk/government/publications/revenue-and-customs-brief-14-2015-vat-compulsory-charge-on-single-use-carrier-bags-in-England

We have taken care to ensure the accuracy of this publication, which is based on material in the public domain at the time of issue. However, the publication is written in general terms for information purposes only and in no way constitutes specific advice. You are strongly recommended to seek specific advice before taking any action in relation to the matters referred to in this publication. No responsibility can be taken for any errors contained in the publication or for any loss arising from action taken or refrained from on the basis of this publication or its contents. © Smith & Williamson Holdings Limited 2015

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Tina Riches
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions