Consultations and Proposals
A significant number of consultations and studies of interest to businesses were commissioned to coincide with the Pre-Budget Report.
Supplementary business rates
Alongside the Pre-Budget Report and Comprehensive Spending Review, the Government has published a White Paper relating to business rate supplements. The document announces the introduction of a new power for local authorities in England to raise and retain local supplements on the national business rate, in order to fund projects that will promote economic development.
The proposal, which builds on the review of sub-national economic development and regeneration, is being promoted as a substantial devolution of power to local communities, allowing them to make investment decisions that more closely reflect local economic need.
The announcement follows extensive public debate on reform to business rates in England and the recommendations of the Lyons Inquiry into local government. The Government's proposed model for business rate supplements involves four levels of protection for business:
- Revenue from supplements will only be available for spending on economic development in addition to existing plans. Proposals will be subject to detailed statutory consultation
- A national upper limit of 2p in the pound will be set on the level on supplements that can be levied
- To protect smaller businesses from disproportionate burdens, properties liable for business rates with a rateable value of £50,000 or less will be exempted from paying supplements
- Where the supplement will support more than a third of the total cost of the project there will be a full 'double-lock' vote of businesses affected. By April 2010, the Government will legislate to enable local authorities to levy the first supplements.
The PDF document is available here: http://www.hm-treasury.gov.uk/media/B/9/pbr_csr07_businessrate266.pdf
Modernising tax relief for business expenditure on cars
In the 2006 Budget, the Government launched a consultation on modernising tax relief for business expenditure on cars. This proposed replacing the existing capital allowance rules that apply to cars costing over £12,000, with a range of first-year capital allowances based on CO2 emissions, with the balance of unrelieved expenditure being taken to a new car pool with lower writing down allowances than the general pool. An update was published in March 2007 in which views were sought on a refined proposal that utilised two pools, the general plant and machinery pool and a lower rate pool, and introduced a threshold for emissions. The pool to which expenditure would be allocated would depend on whether or not the CO2 emission levels were above or below the threshold.
The update document also sought views on proposals to reform the lease rental restriction utilising the same emissions threshold and applying a uniform fixed percentage disallowance on relevant payments on cars with emissions above the threshold.
The summary of responses is available here: http://www.hm-treasury.gov.uk/media/5/2/pbr_csr07_cars248.pdf
Aligning income tax and national insurance
In the 2006 Budget, the Government announced that it would review the case for aligning income tax and national insurance contributions (NICs), with the aim of reducing administrative burdens on employers and improving outcomes for those on lower incomes. The report published today sets out the conclusions of the review, and includes detailed analysis of the costs and benefits of moving to an annual and cumulative NIC system. It also sets out action that HM Revenue & Customs will take to further reduce administrative burdens.
The PDF document can be accessed here: http://www.hm-treasury.gov.uk/media/B/B/pbr_csr07_incometax713.pdf
Moving to a global low carbon economy
One year after the publication of the Stern Review of the economics of climate change, the Government has published a document which draws together the key aspects of its response and its future priorities, both in the context of international negotiations and of the UK's efforts at home and abroad to reduce greenhouse gas emissions.
The PDF document is available here: http://www.hm-treasury.gov.uk/media/A/B/pbr_csr07_stern770.pdf
Offshore funds: a discussion paper
The Government has published a discussion paper setting out how it intends to modernise the offshore funds tax regime, and is seeking comments on these proposals. The discussion paper covers changes to the definition of offshore funds for UK tax purposes, a proposed framework for offshore funds, and the tax treatment of UK investors into those funds.
A consultation stage impact assessment is included in the Annex, on which the Government is inviting comments from interest parties, by a deadline of Wednesday 9 January 2008.
The PDF document can be viewed here: http://www.hm-treasury.gov.uk/media/2/E/pbr_csr07_offshore402.pdf
Planning-gain Supplement
The Treasury has concluded that the new levy was unworkable and now propose to introduce statutory planning charges in the forthcoming Planning Reform Bill, and will not be introducing a Planning Gain Supplement Bill in the next Parliamentary session.
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