Tax avoidance

Double taxation relief for trade receipts
Legislation will clarify the amount of double taxation relief that will be given when foreign tax is paid on income that is a trade receipt for UK tax purposes or on other income that is computed in a similar way for UK tax purposes. The changes will generally take effect from 16 March 2005 for companies and from 6 April 2005 for individuals.

Avoidance through arbitrage
From 16 March 2005, legislation will counter tax avoidance using arbitrage schemes that involve hybrid entities or hybrid instruments.

Double taxation relief anti avoidance
With effect from 16 March 2005, legislation will counter arrangements designed to give rise to excessive double taxation relief claims.

Corporate intangible assets
Changes to the legislation covering corporate intangible assets, such as goodwill, will amend the related party rules and market value rules from 16 March 2005. Payment entitlements under the single payment scheme for farmers will not count as eligible replacement assets for the purposes of capital gains rollover relief (or hold-over relief in the case of depreciating assets) when acquired by companies. This provision will apply to acquisitions of payment entitlement from 22 March 2005.

Financial avoidance
Eight avoidance schemes that have been disclosed to the Inland Revenue under the disclosure rules introduced in Finance Act 2004 will be blocked by legislation. They include schemes based on stripped corporate bonds and corporately owned capital redemption bonds.