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Tax changes in 2011 Budget

As part of its new approach to tax policy making, the Government committed to improving and rationalising the wide range of supporting documents that accompany tax changes, in order to improve the level of information provided to interested parties. The supplementary document Overview of tax legislation and rates (PDF), published alongside Budget 2011, provides a more detailed explanation of all tax measures in the Budget and a summary of their impacts.

Tax Information and Impact Notes

Overview of tax legislation and rates includes as an annex the new Tax Information and Impact Notes (TIINs), trial versions of which were published alongside draft Finance Bill clauses on 9 December 2010.

The TIINs included in Overview of tax legislation and rates are also available as individual PDFs on the HM Revenue & Customs (HMRC) website.

Annex of rates

Overview of tax legislation and rates also contains tables of tax rates, allowances and thresholds as an annex. This annex is also available as a separate PDF on the HM Treasury website.  

Measures with immediate effect

Budget 2011 announces four technical tax measures which take effect from 23 March 2011, and one taking effect from 24 March 2011.   These are:

• Corporate gains: degrouping tax charges – The Government will introduce legislation, with effect from 23 March 2011 to amend the degrouping charge rules to ensure that they operate as intended. This change may affect companies that cease to be a member of a group on or after today (takes effect from 23 March 2011);
• Sale of lessor companies – The Government will introduce legislation with effect from 23 March 2011 amends the sale of lessors anti-avoidance legislation to ensure it remains effective and withdraws the option to elect for alternative treatment (takes effect from 23 March 2011);
• Loan relationships avoidance: recognition – As announced on 6 December 2010, the Government will introduce legislation to prevent avoidance of corporation tax by addressing schemes where a company derecognises certain amounts involving loans and derivatives in its accounts. Following publication of draft clauses, the legislation has been amended to require a company to recognise differences between the accounting and fair value of a derivative as a credit for the period in which tax avoidance arrangements are entered into. (takes effect from 23 March 2011);
• Oil and gas technical measures – The Government will introduce legislation to clarify the scope of the Intangible Fixed Asset Regime as it applies to oil and gas companies operating in the UK and on  the Continental Shelf (takes effect from 23 March 2011);  and
• Stamp Duty Land Tax (SDLT) – The Government will introduce legislation to address three SDLT avoidance risks. The changes cover avoidance techniques that use the subsales rules, the Alternative Finance reliefs and the rules for exchanges of land. These techniques have been used to attempt to avoid tax on both residential and non-residential property transactions, including on high value property transactions (takes effect from 24 March 2011).

Draft legislation for these measures can be found on the HMRCs website.

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