Anti-avoidance campaign launched

Link: Pre-Budget special report

Paymaster general Dawn Primarolo said: ‘The measures announced demonstrate the government’s determination to tackle tax avoidance and create a fair environment for all.’

The measure include a bid to save £100m over the next three years by preventing offshore oil and gas workers claiming a special tax relief designed to encourage British seafarers to work on UK deepwater vessels which could be called upon in times of conflict.

A statement said some offshore workers ‘around the world’ were exploiting the relief – which was never intended for them – and ‘steps will be taken from next April to make clear that employees working on offshore installations are not entitled to claim this relief’.

From April the tax rate on the income and capital gains of trusts will go up from 34% to 40%, with a corresponding rise from 25% to 32.5% for dividends, to remove a distortion providing avoidance opportunities for some higher rate taxpayers.

Lower rate taxpayers will continue to be able to reclaim any excess tax paid by trustees on their behalf.

Details of more ‘modernisation’ proposals for trusts are being published today.

Capital gains ‘gifts relief’ is being amended with immediate effect to counter avoidance schemes involving transferring assets into a trust.

And action is being taken to stop avoidance of inheritance tax on gifts with reservation, where the former owner continues to enjoy the benefits of ownership, by imposing a charge on the benefit of continuing to use the asset.

In the construction industry, a reform of the industry scheme involving a new employment status declaration for contractors is designed to secure more compliance.

The Revenue is imposing a new charge on investors who exit from film businesses ‘with an unwarrantable tax advantage’ after using film tax relief.

Payments to employees from connected third parties will cease to be treated as gratuities exempt from national insurance contributions.