Capital allowances

  • First-year allowances (FYA) at 40% to be re-introduced for one year from April 2009. This will be in addition to the existing Annual Investment Allowance (£50,000) and will be available to businesses of all sizes. New expenditure falling within the main pool of allowances will benefit. "Integral features" and "long-life" assets will not benefit and will continue to receive allowances at just 10%.

Trading losses

  • Existing one-year trading loss carry-back rules are to be temporarily extended to cover three years. However, the amount of losses available to be carried-back beyond one year is to be restricted to £50,000 (for each of two years).


  • The option to tax rules are to be "simplified". The changes will affect businesses that wish to opt to tax land and buildings in respect of which they have previously made exempt supplies.
  • The existing compulsory VAT registration threshold will be extended from £67,000 to £68,000 with effect from 1 May 2009.
  • As previously announced, the standard rate of VAT reverts to 17½% from 1 January 2010. Anti-avoidance provisions will be introduced to counter schemes that purport to apply the existing 15% rate to supplies made after that date.


  • From 1 September 2009, Authorised Investment Funds (AIFs) can elect to be treated as "tax elected" funds, so allowing investors to be treated for tax purposes as if they had invested directly in the fund's underlying assets. The effect of this is that the point of tax will be moved to the investor (and away from the AIF).
  • Investors in certain types of transparent offshore entities will have their tax compliance simplified by being allowed to ignore disposals by those entities of underlying assets (effective from 1 December 2009).
  • A new "offshore fund" definition will be introduced with effect from 1 December 2009, using a characteristics-based approach rather than the current regulatory definition "collective investments scheme".
  • A "white list" of transactions that are not trading transactions is to be introduced to give certainty to investors in AIFs (with effect from 1 December 2009).

Real estate investment trusts (REITs)

  • Anti-avoidance legislation will be introduced to prevent companies qualifying for REIT status where there has been "unacceptable" restructuring in order to meet the REIT conditions (for example where properties are let out by one member of a group to another without the properties leaving the group).
  • There will be further tinkering with the REIT rules to make the regime work more efficiently. For example, REITs will be allowed to issue convertible preference shares and the "balance of business" test will have a single accounting definition to cover both groups and single company REITs.

Stamp duty land tax (SDLT)

  • The current SDLT "holiday" for residential acquisitions (temporarily increasing the exempt threshold to £175,000) will be extended to 31 December 2009.
  • Leasehold enfranchisement relief will be extended to all those who exercise their enfranchisement rights.
  • Current reliefs enjoyed by registered social landlords on acquisitions are to be extended to profit-making bodies who qualify as "registered providers of social housing" and the acquisition is funded by way of a public subsidy.
  • There is to be simplification of the SDLT consequences of acquisitions by tenants under the "Rent to HomeBuy" schemes.

Alternative investment bonds

  • Land asset-based securities issued under alternative investment arrangements are inefficient under the UK tax regime. The aim of proposed new SDLT and capital gains tax reliefs is to ensure that these alternative bonds are subject to taxation equivalence to "normal" bonds.
  • There will also be capital allowance changes. A person obtaining finance using these bonds will remain entitled to allowances even though the land itself is held by the bond issuer. These changes are due to take effect from Royal Assent.

Landfill tax

  • From 1 April 2010 the standard-rate of landfill tax will increase by 20% to £48/tonne.
  • Following the recent Waste Recycling Group case, where the use of materials at a landfill site for engineering purposes did not give rise to a tax liability, changes will be brought in to ensure that such uses of material at a landfill site are subject to tax.

Transfers of income streams

  • New anti-avoidance legislation will ensure that receipts derived from a right to receive income are taxed as income for income tax and corporation tax purposes. Following representations made by Wragge & Co and others, the draft legislation will be amended so as not to catch transfers of income resulting from the grant or surrender of leases.