Categorized | news

What tax changes are in store for contractor accountants?

What tax changes are in store for contractor accountants?

George Osborne delivered the government’s Autumn statement on Monday and laid out new plans for the multinational tax regime in the UK.

Designed to provide certainty for businesses and contractor accountants, the new controlled foreign companies’ rules will be legislated for in the 2012 Finance Bill.

The coalition plans to introduce an entity-based system and levy a CFC charge on overseas profits artificially diverted from this country. Attention will be focused on high risk entities and the government intends to devise specific rules for financial institutions such as banks and insurance companies as well as property industries.

An exemption will be made to allow groups to manage their overseas operations efficiently, while at the same time protecting the UK tax base. It will work by assessing the debt-to-equity ratio of the finance company and levying the CFC charge on any excess equity.

Businesses have suggested to the Treasury that the CFC rate should be less than 10%. The current government proposal is a debt/equity ratio of 1:2; meaning two thirds of income from overseas finance would be exempt from the tax. With a 26% rate of corporation tax, the levy on overseas finance income would be 9%.

Next year’s Finance Bill will contain an interim step of exempting foreign to foreign group transactions that do not affect the UK tax base.

Other proposals laid out on Monday included annual phased reductions of 1% to the main corporation tax rate, leading to a rate for a limited company of 24% in 2014. The government also intends to introduce a “Patent Box” scheme in April 2013 whereby profits arising from patents will be subject to a 10% tax.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: A golden opportunity by kevindooley

Be Sociable, Share!

Leave a Reply

You must be logged in to post a comment.

  • Switch Accountants for FREE

    Switch Accountants for FREEAt K&B Accountancy Group we have introduced a simple and straightforward approach to changing accountants. We’re offering contractors, consultants and freelancers the opportunity to switch to K&B Accountancy Group for FREE without the need to pay for any ‘catch up’ or retrospective accountancy fees for the previous year’s accounts and corporation tax return* *T&Cs apply

our top 5 twitter posts


contractor accountants


twitter Join the conversation
Free Telephone Advice