| Research institute spinout companies
If an employee of a research institution (RI) acquires shares in
a spinout company to which the RI has transferred intellectual property,
an income tax and national insurance charge could arise under the
employment-related securities provisions. This has contributed to
a significant reduction in the number of new spinouts. The value
of intellectual property on transfer to the spinout company will
be disregarded from 2 December 2004, thereby avoiding an immediate
tax and NIC charge. For spinout companies set up before 2 December
2004, there will be an opportunity to elect before 15 October 2005
that income tax and NIC liabilities will not be payable unless and
until the company is successful.
International accounting standards
Technical amendments will be made to the Finance Act 2004 legislation
and to regulations made in December 2004. These reflect recent developments
in both IAS and UK Generally Accepted Accounting Practice and correct
some errors and omissions in the previous legislation. The changes
will generally have effect for periods beginning on or after 1 January
2005, the earliest date from which companies are permitted to use
IAS to draw up their accounts.
An anti-avoidance measure will also be introduced to prevent companies
taking advantage of the announcement made in the Pre-Budget Report
that transitional adjustments would be deferred until 2006 at the
earliest. This will apply from 14 December 2004.
Film tax relief
Tax relief for low budget qualifying British films (s48 relief),
which was due to expire on 1 July 2005, will be extended until 31
March 2006. This extension will enable films to qualify for current
tax relief, where the first day of principal photography is before
1 April 2006 and the film is completed before 1 January 2007. Acquisition
relief will continue to be available for films that meet these conditions
and are acquired before 1 October 2007.
The Pre-Budget Report announced measures to counter tax avoidance
schemes based on film production and acquisition. These included
schemes which allowed relief to be claimed more than once on a single
film, used arrangements to defer tax for over 15 years and enabled
partnerships to obtain loss relief for money that was not fully
at risk. The relevant legislation will generally be effective from
2 December 2004.
Renovation of business premises
A new Business Premises Renovation Allowance scheme will provide
100% first-year allowances for capital expenditure on renovating
or converting vacant business properties in designated disadvantaged
areas. The scheme will apply if the EU grants state aid approval.
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