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Autumn Statement 2014: Measures with Immediate Effect

My honourable friend the Financial Secretary to the Treasury (David Gauke) has today made the following Written Ministerial Statement.

This Government is committed to delivering a tax system that is fair and promotes growth and competitiveness.

As part of the Autumn Statement 2014, the Government has announced a number of measures to reform stamp duty land tax, help tackle tax avoidance, address unfair tax outcomes and support investment. The legislation for these measures will have immediate effect.

Stamp duty land tax: reform of structure, rates and bands

The Government is introducing legislation which reforms stamp duty land tax on purchases of residential property with effect on and after 4 December so that it will be payable at each rate on the portion of the purchase price which falls within each band, rather than at a single rate on the whole transaction value. The legislation also amends the rates and thresholds to ensure this change is introduced in a fair way.

Corporation tax: restricting relief for internally-generated goodwill transfers between related parties on incorporation

The Government is introducing legislation to restrict a company’s corporation tax relief where internally-generated goodwill and customer related intangible assets are acquired on the incorporation of a related party’s business. The change will be effective for all acquisitions occurring on or after 3 December 2014 to prevent forestalling.

Capital gains tax: restricting entrepreneurs’ relief for goodwill on incorporation

The Government is introducing legislation to prevent claims for entrepreneurs’ relief on disposals of the reputation and customer relationships associated with a business (the ‘goodwill’), to a close company to which the seller is related. The change will be effective for disposals of goodwill on or after 3 December 2014 to prevent forestalling.

Capital gains tax: entrepreneurs’ relief and deferred gains

With effect from 3 December, the Government will allow gains which are eligible for the 10 per cent capital gains tax rate provided by entrepreneurs’ relief (ER), but which are instead deferred into investments which qualify for the enterprise investment scheme, or into investments eligible for social investment tax relief, to remain eligible for ER when the gain is realised. Draft legislation for this measure will be published on 10 December.

Income tax: miscellaneous loss relief

The Government is introducing legislation to counter avoidance of income tax involving losses from miscellaneous transactions. Legislation denying loss relief where a miscellaneous loss, or miscellaneous income, arises from relevant tax avoidance arrangements will have effect from 3 December 2014. Legislation will also be introduced with effect from tax year 2015-16 to limit relief to miscellaneous income of the same type as the loss.

Bank loss-relief restriction

The Government will introduce legislation in Finance Bill 2015 to restrict the use of brought forward losses by banks. The legislation will have effect from 1 April 2015, except for anti-avoidance rules that come into effect from 3 December.

High pressure, high temperature cluster area allowance

The Government is introducing legislation to create a new cluster area allowance to support the development of high pressure, high temperature projects and encourage exploration and appraisal activity in the surrounding area or ‘cluster’. The allowance will exempt a portion of a company’s profits from the supplementary charge. The amount of profit exempt will equal 62.5 per cent of the qualifying capital expenditure a company incurs in relation to a cluster area on or after 3 December 2014.

Inheritance tax exemption for medals and other awards

The Government is extending the existing inheritance tax exemption for medals and other decorations that are awarded for valour or gallantry. From 3 December 2014, it will apply to all decorations and medals awarded to the armed services or emergency services personnel, and to awards made by the Crown for achievements and service in public life. Draft legislation for this measure will be published on 10 December.

Corporate debt

The Government is introducing legislation to repeal rules concerning the tax treatment of deferred interest and discounts on debt issued to UK companies by a connected company in a non-qualifying territory. The repeal will have effect for loans entered into on or after 3 December 2014; for loans already existing at that date it will be effective in respect of interest accruing after 31 December 2015. If the creditor or the terms of an existing loan are changed between 3 December 2014 and 31 December 2015, the repeal will have effect for that loan in respect of interest accruing after the change.

Further details on the measures listed above can be found on the gov.uk website.