BusinessCompany NewsUK businesses await Finance Bill clarification

UK businesses await Finance Bill clarification

UK business are holding back on the sale of shares and subsidiaries as they wait for clarification from the government on legislation designed to curb the abuse of substantial shareholdings tax relief included in the Finance Bill.

The Bill, which is currently in committee stage, includes a provision giving tax-relief to companies selling substantial shareholdings and small subsidiaries. It also incorporates anti-avoidance clauses to prevent exploitation of this regime. But business leaders have said the anti-avoidance measures are ‘too wide and could result in the exclusion of many genuine trading operations’.

Richard Baron, head of the policy unit of the Institute of Directors said companies are concerned, as they don’t know whether they are going to get tax-relief from selling substantial shareholdings or subsidiaries.

He said: ‘Not many transactions have gone through because people are aware of the problem so if they are really uncertain, they will have held back. If the government makes it clearer it will encourage more people to use the relief.’

But Ruth Kelly, the Treasury’s economic secretary, promised ‘a clear statement of practice in due course’.

A third reading of the Bill is provisionally expected on 4 July.

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