PDF Version

Amid the backdrop of an improving economic outlook, George Osborne delivered his autumn statement yesterday. There were a number of announcements affecting Tax and National Insurance Contributions generally and a number that came under the heading of “tackling tax avoidance”.

Of particular note to the financial services industry was the issue of draft legislation in relation to Partnerships with Mixed Membership. Further legislation will be released next week.


The draft legislation is extensive and complex and covers allocations of excess profits to non -individual (ie corporate) members were an individual has the power to enjoy the corporate’s share or deferred profit arrangements exist and it is reasonable to suppose that the allocation to the corporate is wholly or partly attributable to the arrangements.

The effect of the legislation is that where a corporate member is allocated a profit in excess of the “notional profit”, the excess is reallocated to the individual member and taxed accordingly. The reallocation can also be to an individual who is not a member where it is reasonable to assume that person would have been a member but for the new rules.

The “notional profit” is defined as either the appropriate return on capital or the appropriate return for services (or a combination of both). These are narrowly defined. An individual can obtain “benefit” from the corporate member if they or any connected person is entitled to or are able to enjoy the assets/profit of the corporate member.

The rules on profit allocations will apply from 6 April 2014 and there will be two separate periods where the accounting period itself straddles that date. Anti-avoidance rules will apply from 5 December to protect tax revenues from actions that might be taken before 6 April 2014.


Other measures announced include:

  • Artificial use of dual contracts by Non-Domiciles where a comparable level of tax is not paid on the overseas contract.
  • Anti-avoidance to prevent the use of intermediaries to disguise employment
  • Introduction of tax geared penalties for users of failed tax avoidance schemes if tax returns are not formally amended following the failure of similar schemes in the courts.
  • Social Investment Tax Relief – New tax relief for equity and certain debt investments in social enterprises
  • Capital Gains Tax (CGT) private residence relief – Reduction in the final period exemption from 36 months to 18 months
  • CGT and non-residents – Gains made by non-residents on the disposal of UK residential property will be subject to CGT
  • Venture Capital Trust (VCT) – no relief will be available where investment is conditionally linked to a VCT share buy-back or are made within six months of a disposal of shares in the same VCT . Further consultation will also occur on the use of converted share premium accounts to return capital to investors and also the subscription of shares by nominees
  • Increase in ISA limits to £11,880 (£5,940 cash element)
  • Uplift in limits for Share Incentive Plans and SAYE schemes
  • New tax reliefs for employee ownership arrangements
  • A number of measures designed to alleviate business rates

A separate Throgmorton alert which includes further details on some of the above points and other minor changes that will be introduced can be found on our website.

If you have any questions please speak to your usual contact on +44 (0)118 939 3200 or any of the following: 

Neil Oliver

6 December 2013 

< previous                                                                                                                                                     next >

To download a pdf version of this publication please click HERE                

About Throgmorton: Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing to the UK SME financial services sector.

The information in this notice is intended for general guidance only. Throgmorton does not accept any responsibility for losses incurred to any person acting or refraining to act as a result of the information in this notice. Advice should be taken in the context of specific circumstances.

Copyright 2012 Throgmorton UK Limited. All rights reserved. Throgmorton is a trading name of Throgmorton UK Limited a company registered in England and Wales (company no 3853848) having its registered office at 4th Floor, Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS.