Tax professionals in the UK anticipate that the Autumn Statement, scheduled to be delivered 25 November 2015, may include measures that could affect employers, such as changes to the tax treatment of termination payments. There may also be indications as to how the government intends to move forward on certain proposals related to pensions.
In any event, employers need to prepare for the following changes that will be effective from 6 April 2016:
Finance Bill 2015-16 amended the loan relationship rules to include a new definition of “amortised cost basis of accounting.” The term is relevant for certain provisions in the loan relationship rules. For example, taxable debits and credits from loans between connected companies are required to be determined on an amortised basis of accounting, and a statutory relief for releases of loans (for example, for an issue of shares) is conditional on the borrowing being accounted for on such a basis.
Currently, the meaning of the term “amortised cost basis of accounting” for tax purposes, is not directly linked to the accounting definition. However, the introduction of new GAAP accounting standards, with mandatory effect for most companies for periods beginning on or after 1 January 2015, has led to uncertainty.
In response, Finance Bill 2015-16 amends the rules on loan relationships to substitute a new definition of an “amortised cost basis of accounting”—a definition that is directly linked to the accounting meaning and applies to loans entered into in periods beginning on or after 1 January 2016. Transitional relief is provided for certain loans.
Read a November 2015 report prepared by the KPMG member firm in the UK: Weekly Tax Matters (13 November 2015)
Other topics described in this report include:
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.