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With the festive season behind us, we have had time now to reflect on the Chancellor's Autumn Statement, which now seems to fall traditionally in early December!

There were relatively few changes in the world of tax, but the limited announcements that were made do carry some significance.

We have outlined the main areas of focus for ourselves and our clients below. We would be happy for those potentially affected to contact us to discuss their circumstances and how we can help them.

Capital gains tax charges for non-residents

As expected, a capital gains tax charge is to apply to future gains made by non-residents disposing of UK residential property. This will come in from April 2015, and the specifics are yet to be announced. A consultation on how to introduce this will be published in early 2014 and it will be important to understand whether any “grandfathering” provisions apply, or whether it would make sense to take action to re-base a property prior to the changes coming into force.

Capital gains tax main residence relief

Capital gains tax charges are not typically incurred on sale of a property which is an individual’s only or main home. There is a helpful extension to this relief which is intended to cover a period after an individual has moved out of a property but has not yet sold it. This can also be helpful where an individual has several residences, but will be watered down from 6 April 2014 as the final period exemption will be reduced from 36 months to 18 months. This was something of a surprise, and has been widely interpreted as an anti-avoidance measure to water down the benefit of "flipping" the main residence.

Partnerships, LLPs

Following the partnerships review announced in last year’s Autumn Statement, measures will now be introduced, broadly to target:

  • "salaried partners" who do not take on the sort of risk and reward structure which might be expected for a genuine economic partner; and
  • "mixed” partnerships, with both individual and non-individual (typically corporate) partners. The intention is to counter-act the allocation of profits to corporate and/or individual partners to secure a tax advantage.

These changes are of wide application, and seem likely to affect hedge funds and private equity businesses in particular, as well as more general commercial concerns. The proposed rules are therefore considered in detail in the “Partnership Profit Allocations: All Mixed Up” article of this newsletter.

Dual contracts

Legislation will be introduced to further prevent non-domiciled individuals dividing a single employment between separate contracts for UK and overseas duties. Such arrangements, commonly known as ‘dual contracts', have long fallen out of favour in the City but are still implemented. It remains to be seen what the legislation will say, but we would expect the opportunities for future planning in this area to be very restricted.

Tax breaks for married couples

The much vaunted tax break for married couples turned out to be something of a damp squib, with the "giveaway" limited to the transfer of up to £1,000 of the tax-free allowance to a basic rate taxpayer. At best, this can only represent a reduced income tax liability of up to £200 and is unlikely to affect the majority of clients.