Proposed cap on income tax reliefs

The government has published a consultation document following Budget proposals to introduce a limit on currently uncapped income tax reliefs with effect from April 2013. The stated intention of the proposals is prevent wealthy individuals from reducing ‘their income tax bills to zero year after year by using these income tax reliefs to excess’. The proposed cap will apply to the following reliefs: trade loss relief against general income; early trade losses relief; post-cessation trade relief; property loss relief against general income; post-cessation property relief; employment loss relief; former employees deduction for liabilities; share loss relief; losses on deeply discounted securities; and qualifying loan interest. Excluded from the cap are: gift aid; relief for gifts of land and shares; payroll giving; and community investment tax relief.

Writing in this week’s edition of Tax Journal (page 9) Paul Aplin Tax Partner...