The Chancellor delivered his 2014 Budget this week. Here are the main announcements for the Hotels and Leisure sector:
- The Seed Enterprise Investment Scheme(“SEIS”) - SEIS and the associated CGT relief for re-investing chargeable gains in SEIS shares have been made permanent.
- R&D tax credit - The rate of R&D payable tax credit for loss making SMEs will be increased from 11 per cent to 14.5 per cent for “qualifying expenditure” incurred on or after 1 April 2014. This will increase the rate of the cash credit payable to SMEs that conduct qualifying R&D activity but do not have corporation tax liabilities.
- Annual Investment Allowance - The maximum amount of Annual Investment Allowance that could be claimed on “qualifying expenditure” will be increased to £500,000 and the period extended to 31 December 2015.
- ECA sites and capital allowances - The designated enhanced capital allowances sites in Enterprise Zones (“ECA Sites”) were introduced in 2012 for a five year period to 31 March 2017. Businesses investing in new plant and machinery in ECA Sites can qualify for 100 per cent capital allowances. It was announced in Budget 2014 that this period has been extended to 31 March 2020. The qualifying expenditure must be incurred between 1 April 2012 and 31 March 2017, and the area in which the plant and machinery is to be used must be an “Assisted Area” at the time that the expenditure is incurred.
- ATED - The Budget included a number of measures to tackle residential property being enveloped, the measures tackle properties worth more than £500,000 up to £2 million. There will be a 15% SDLT rate on acquisition. The properties will be subject to the annual tax on enveloped dwellings ("ATED") and a 28% rate of CGT will be due on any gain on a disposal.
- Theatre production relief - Legislation will be introduced during the passage of Finance Bill 2014 for a new corporation tax relief for theatrical productions and touring theatrical productions. The Government will consult shortly after Budget 2014 on the design of the relief.
- Energy efficiency relief - An energy efficient and a water efficient enhanced capital allowances scheme are to be amended (dependent on State aid approval) - which will provide 100 per cent first year allowance for expenditure on certain energy-saving and water efficient technologies, the list of technologies is to be amended to include: active chilled beams and desiccant air dryers with energy saving controls.
- Beer duty - Beer duty will be cut by 1p per pint, while taxes on ordinary cider and spirits are to be frozen.
- Bingo duty - Bingo duty is to be reduced from 20% to 10% for accounting periods starting on or after 30 June 2014.
- The ISA will be reformed into a New ISA (NISA), which will be a simpler product with a single limit for cash and stocks and shares. The annual investment limit for the NISA will be £15,000 per year.
- The government intends to introduce a new requirement for taxpayers to pay upfront any disputed tax associated with schemes covered by the Disclosure of Tax Avoidance Scheme (DOTAS) rules or counteracted under the General Anti-Abuse Rule.
- A number of pensions related changes were introduced to allow people greater freedom and choice over how to access their defined contribution pensions.
- Tax avoidance remained a focus of the Budget and consultations were announced on improving the DOTAS rules and VAT Avoidance Disclosure Regime.
- Venture Capital Trusts will be prohibited from returning share capital to investors within three years of the end of the accounting period in which the shares were issued.
- Businesses will no longer be able to account for VAT on a prompt payment discount when the discount is not taken up.
- The VAT registration threshold will increase to £81,000.