On 13 July 2012, HMRC issued its consultation in relation to the cap on income tax reliefs due to apply from 6 April 2013. While the closing date of the consultation is 5 October and further details will not be released until later in the year, there are a number of practical matters which individuals may wish to consider in advance of the start date as follows.
- Review investments in unquoted trading companies to ascertain whether negligible value claims should be made to crystallise income tax losses in advance of the cap being introduced.
- Review all existing loans and consider changes in loan arrangements so that loan interest is relieved under computational rules such as mortgage interest relief on rental properties) rather than against other income (such as loans to buy an interest in a partnership).
- Accelerate trade expenditure to increase losses prior to the introduction of the cap.
- Delay trade income to increase losses prior to the introduction of the cap.
- If cessation of trading is expected in the near future, consider ceasing now to maximise terminal loss relief.
- Review capital allowance claims on property businesses to maximise relief prior to the introduction of the cap.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.