Tax transparent fund
As announced in Budget 2011, legislation will be introduced to permit the authorisation of tax transparent funds from summer 2012.
Regulations will be made to establish the tax treatment applying to UK investors’ holdings in such funds and establish the treatment for transactions for the purposes of stamp taxes.
In order to clarify the position for all investors in collective investment schemes (CIS), the capital gains tax rules for mergers and reconstructions of CIS will be simplified and changes may be made as to what constitutes a disposal.
Life insurance: income tax avoidance
Finance Bill 2012 will include legislation to amend the rules for calculating chargeable event gains liable to income tax. These measures will put beyond doubt that chargeable gains liable to income tax are not reduced by the fact that there are untaxed gains earlier in the life of the policy.
Further provisions will be included to ensure that interdependent policies (where the value of benefits payable from one policy is dependent on premiums paid into another policy) will be treated as a single policy for the purposes of the chargeable event regime.
Draft legislation was published on 21 March 2012 and will be introduced into Finance Bill 2012 and will apply to policies issued on or after 21 March 2012, and to policies issued before this date where certain events occur on or after this date.
Qualifying life policies
With effect from 6 April 2013 the premiums that can be paid into a qualifying life policy will be limited to £3,600 per annum for policies issued on or after that date
Transitional provisions will apply for the period to 6 April 2013.
Chargeable event gains for non-residents
The time apportionment rules in the chargeable event gain regime that reflect a policyholder’s period of residence outside the UK will be subject to consultation.
Any legislation will be in Finance Bill 2013
Withdrawal of Life Assurance Premum Relief
For life assurance premiums paid under policies issued on or before 13 March 1984, income tax relief at 12.5 percent is available. The relief was removed for policies issued on or after 14 March 1984. From 6 April 2015, the relief will no longer be available for premiums either due and payable or paid on pre 14 March 1984 policies.
Repeal: life assurance paid under EFRBS
Following the Office of Tax Simplification (OTS) review, the relief for life assurance premiums paid by an employer under an Employer Financed Retirement Benefits Scheme (EFRBS) is abolished in line with the similar repeal of the general relief for life assurance premiums. This relief only applied to payments made under a policy issued on or before 13 March 1984.
Pensions tax relief
Legislation will be introduced in Finance Bill 2013 to amend the rules which currently allow employers to pay pension contributions into their employees’ family members’ pensions as part of their employees’ remuneration package to remove the tax and NIC advantages of these arrangements.
Abolition of contracting out
From 6 April 2012 it will no longer be possible to contract out through a defined pension scheme. Legislation will be introduced in Finance Bill 2013 to bring tax legislation in line with Department of Work and Pensions legislation.
Legislation will be introduced in Finance Bill 2013 to amend the pensions tax legislation for bridging pensions to reflect the changes in state pension age and to allow for any future changes in the state pension age.
Qualified Recognised Overseas Pension Schemes (QROPS)
Legislation to be introduced in Finance Bill 2013 will strengthen reporting requirements and powers of exclusion relating to QROPS.
It was also announced that where the country or territory in which a QROP is established introduces legislation or creates or uses a pension scheme to provide tax advantages not intended under the QROPS rules, the Government will act to exclude the pension scheme from being a QROP.