IHT and pensions
HMRC have issued a discussion paper on inheritance tax and pension simplification. The intention of this paper is to seek a consensus:
- on the detailed application of inheritance tax law to the new situations arising under the simplified pensions regime; and
- on how in practice cases which are chargeable to inheritance tax should be identified and any charge should be quantified.
Comments are invited on the issues described in this paper and should be sent by Friday 30 September 2005 to: HM Revenue & Customs, Integrated Business Streams, Capital Taxes Policy Group, Room G73, Mail Point A, 100 Parliament Street, London SW1A 2BQ, tel: 020 7147 2773, e-mail: Alice.Wayte@hmrc.gsi.gov.uk.
www.hmrc.gov.uk
Exempt compensation
Compensation for Holocaust victims paid from foreign banks holding their war era accounts will be tax exempt, the Government has announced.
The original tax exemption was introduced in 2000 through Extra-statutory Concession A100. It applies to compensation payments made by UK banks in respect of dormant accounts owned by Holocaust victims or their heirs. Since the introduction of the exemption it has come to light that comparable payments may be made to Holocaust victims or their heirs in respect of monies held by the banks of other countries. For example, it is proposed that awards that have been made to victims or targets of Nazi persecution or their heirs through the Claims Resolution Tribunal for dormant accounts in Switzerland in respect of monies deposited in Swiss banks in the period before and during the Second World War will qualify for the new exemption.
HMRC will be consulting the Association of Jewish Refugees and other interested parties on the drafting of the proposed legislation. If someone is due to send his self-assessment return for the tax year 2004-05, and he believes a compensation payment received by him during the year may be exempt, once the proposed legislation becomes law, he need not include the payment in his return. But he should mention it to his usual tax office when sending in the return.
For earlier years, if someone has received a compensation payment which he believes may qualify for exemption and for which a self-assessment tax return has already been submitted and income tax or capital gains tax paid, he will be able to claim back the tax paid. Once the proposed legislation becomes law, he will need to send an amended return to the office to which he normally sends his return.
Successful claimants will often trace their relationship to the original account holder through predecessors who are now dead. The Finance Bill will include exemption from any additional inheritance tax (and the taxes it replaced) on their estates which might, with hindsight, be thought to arise from the discovery of these accounts. The exemption will apply to any potential claimant who died before the respective award scheme was opened for claims. If someone believes that inheritance tax has been paid where the payment may qualify for exemption, he should write to HMRC Capital Taxes, Ferrers House, Castle Meadow Road, Nottingham NG2 1BB, quoting the name and date of death of the deceased person.
Further information is available at www.hmrc.gov.uk/individuals/holocaust.htm or by ringing the self assessment helpline 0845 9000 444. Details of the 'Restore UK' scheme can be obtained from www.restoreuk.org.uk.
HMRC news release dated 19 July 2005.
Leased plant
Changes in the way that plant and machinery leases are treated for tax purposes will take effect from 1 April 2006, the Government has announced. The 2004 Pre Budget Report contained an announcement that the Government had decided to remove a distortion in the current system, caused by the differing tax treatment of finance from different sources, by aligning the tax treatment of leased plant and machinery with that of other forms of finance, and that it intended to legislate for this in Finance Bill 2006.
HMRC published on 21 July a technical note setting out:
- details of the commencement and transitional provisions;
- further details of the new regime.
HMRC expects this reform to ensure that business decisions are taken for commercial rather than tax reasons. Broadly, when the changes come into effect, only new leases will be affected. The treatment of existing leases will remain the same as at present. Leases under five years will be unaffected, as will many straightforward leases up to seven years.
The new treatment will apply to both corporate and non-corporate taxpayers.
The technical note and an updated partial regulatory impact assessment can be found on www.hmrc.gov.uk/leasing/. Comments relating to the technical note should be sent by 14 October 2005 to: Paul Lane, HM Revenue & Customs, CT & VAT Products & Processes Business Tax, Mailstation A, 3rd floor, 100 Parliament Street, London SW1A 2BQ, e-mail: paul.lane@hmrc.gsi.gov.uk.
HMRC news release dated 21 July 2005.
Online review
Lord Carter of Coles will lead a review of HMRC online services, looking at realising benefits for taxpayers while ensuring that the department continues to deliver a sustainable and efficient service that supports compliance.
It will be recalled that Lord Carter produced the review of payroll services, which led to compulsory online filing for employers' end of year returns. It is to be hoped that Lord Carter's review remembers that many individuals do not have, or even want, access to the Internet and furthermore, that they may not be able to afford to pay someone else to file online for them.
Written submissions to the review should be sent by 16 September 2005 to: Carolyn Parmeter, 1st Floor, 100 Parliament Street, London SW1A 2BQ.
HMRC news release dated 21 July 2005.
