City bonus tax crackdown to hit start-ups, warns ICAEW
City bonuses invested into tax avoidance schemes will be cracked down upon, but ICAEW warns the move will discourage investment in start-up businesses
Cracking down on city bonus tax avoidance will hit start-up businesses,
claims the
ICAEW .
The institute has warned that limits on partnerships’ loss relief would make
it harder for them to receive financing from family and friends.
The government is looking to restrict the use of ‘sideways loss relief’ by
the wealthy to cut their tax bills. It has been concerned that wealthy people
reduce their tax on earnings by claiming the relief on losses generated by the
partnership.
The introduction of a £25,000 limit on the losses than can be used to offset
the income of a partner who is not actively involved in the business is planned.
The ICAEW warns the plan will adversely affect businesses that are not tax
avoidance schemes, reported the FT.
‘The result is that the measure will impact upon many small businesses being
set up with substantial investment in the early years,’ the ICAEW stated.
The
Treasury
has already said it would allow some exemptions for
film tax schemes caught up in the
legislation.
Further reading:
Film industry threatened by
loss of tax breaks
John Cullinane, CioT: When
is a TAAR not a TAAR?