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Requirement for large businesses to publish tax strategies

Following consultation last year, new measures will be introduced

to improve large business tax compliance. They will include a

requirement that large businesses publish their tax strategies

and there will be special powers to tackle a minority of large

businesses that persistently engage in aggressive tax planning.

Offshore property developers

Special rules will ensure that the full amount of profits from

trading in UK land will always be subject to UK tax, whether

or not the person to whom they arise is UK resident. HMRC will

create a new taskforce to ensure tax on these profits is collected


Royalty withholding tax

The regime for the deduction of tax at source will be changed

to bring all international royalty payments arising in the UK

within the charge to income tax, unless those taxing rights have

been given up under a double taxation agreement or the EU

Interest and Royalties Directive. UK withholding tax will apply to

a wider definition of royalty payments. There will be a domestic

anti-treaty abuse provision to prevent royalty payments being

paid to tax havens without deduction of tax via the use of

conduit companies. Withholding tax will apply to payments that

are attributable to a UK permanent establishment, even if the

payment of the royalty is not made from the UK.

Tax deductibility of corporate interest expenses

New rules that are in line with OECD recommendations will

target profit shifting through interest expenses from 1 April 2017.

They will limit the tax relief that large multinational enterprises

can claim for their interest expenses. A fixed ratio rule will limit

corporation tax deductions for net interest expense to 30% of

a group’s UK earnings before interest, tax, depreciation and

amortisation (EBITDA). There will also be a group ratio rule for

groups that have high external gearing for genuine commercial

purposes. To target the rules at large businesses, there will be


de minimis

group threshold of £2 million net of UK interest



16 MARCH 2016

page 11


The AIA in 2016 is

£200,000, in 2015 it

was £500,000.

If your

financial year has not yet

ended, plan your capital

expenditure carefully.