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Government seeks views on wide-ranging tax reform

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The government published nine consultation documents to promote discussion and solicit views on tax reform yesterday.

The documents cover: (1) PAYE reform; (2) furnished holiday lettings; (3) pensions tax relief; (4) associated company rules; (5) Inheritance Tax avoidance; (6) taxation of foreign branches; (7) controlled foreign company interim improvements; (8) modernisation of Investment Trust Company rules; and (9) National Minimum Wage regulations.

Details on each document/review are set out below.

(1)

The government is soliciting views on moving to a system that collects information on PAYE deductions at the time employers pay individuals (Real Time Information) to simplify taxation and reduce burdens on business. It also wants views on longer-term reform to improve accuracy and reduce administrative burdens.

(2)

The government is seeking opinions on the tax rules for furnished holiday lettings to ensure compliance with EU legal requirements (e.g., changing the eligibility thresholds and restricting the use of loss relief).

(3)

The government wants to limit pensions tax relief and has set out a range of policy issues that would need to be decided in any new regime.

(4)

The government wants to change associated company rules as they apply to the small profits rate of corporation tax. As announced in the June Budget, the Government will introduce the proposed legislation in a Finance Bill in 2011 and it will take effect from 1 April 2011.

(5) Inheritance tax (IHT) tax avoidance / disclosure consultation

The government wants to bring IHT, as it applies to the transfer of property into trust, into the disclosure regime, with the objective of addressing the problem of identifying such schemes and users at an early stage.

(6)

The government is reviewing the scope of an exemption for foreign branch profits, aimed at delivering a more territorial approach to corporation tax to enhance the UK's competitiveness.

(7)

The government has published a short note setting out the aim and scope of CFC interim improvements, together with the framework for consultation over the summer.

(8)

The government is considering proposals to modernise tax rules for Investment Trust Companies, together with consequential amendments to the Companies Act by the Department for Business Innovation and Skills.

(9)

The Government has published a summary of responses to the recent consultation on travel and subsistence schemes implemented for some temporary workers paid at or near the National Minimum Wage (NMW). After considering the responses, the government has decided that action should be taken. It will amend the NMW Regulations to take effect from 1 January 2011.

To learn more about the consultations, and perhaps even participate in some of them, click on the links above.

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