Latest Thinking

Weil on the Move

Title: Weil on the Move – Episode 3 – Taxation of termination payments – the new rules
Podcasters:  Oliver Walker (Partner), Ivor Gwilliams (Counsel)
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Complicated new rules will shortly come into force governing the taxation of termination awards made to employees.  Among other things, the new rules require employers:

  • from 6 April 2018, to tax as earnings that part of an employee’s termination payment that is equal to the basic pay the employee would have received had he or she worked the full notice period (regardless of whether any part of the payment constitute a PILON); and
  • from 6 April 2019, to pay employer’s National Insurance contributions on any part of a compensation payment that exceeds the £30,000 tax-free exemption. 

Weil Tax Partner, Oliver Walker, and Weil’s London Head of Employment, Ivor Gwilliams, discuss the new rules and provide some practical tips for employers.


Title: Weil on the Move — Episode 2 – QCB or Non-QCB: That is the Question
Podcasters: Oliver Walker (Partner), Stuart Pibworth (Associate)
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The recent U.K. Court of Appeal decision in Hancock v HMRC raises the interesting (and important) question of the U.K. tax treatment of reorganizations involving qualifying corporate bonds (QCBs) and non-qualifying corporate bonds (non-QCBs). Although often thought of as one of the more certain areas of personal taxation, the Hancock decision has thrown some doubt on this topic.

Although Hancock is particular to its facts, the decision demonstrates the care that should be taken when undertaking U.K. reorganizations involving QCBs and non-QCBs (in particular where securities are converted), and the U.K. tax implications of subsequent disposals. Hancock also provides yet another example of the purposive approach to statutory interpretation increasingly being applied by the U.K. courts in tax cases. Notwithstanding the apparent clarity of tax legislation, a literal interpretation by taxpayers may not suffice if the outcome is contrary to the purported purposes of the rules (as divined by the court).

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Title: Weil on the Move — Episode 1 — The New SSE: Good for Geese and Ganders?
Podcasters: Oliver Walker (Partner), Stuart Pibworth (Associate)
Full episode description:

In Autumn 2016, the U.K. Government announced that the domestic exemption from U.K. corporation tax on gains arising on the disposal of substantial shareholdings, known as the “substantial shareholdings exemption” or “SSE”, would be reformed. Since that announcement, the government has consulted on the potential changes, and has published draft legislation which was expected to come into force on April 1, 2017. However, the recent political developments have delayed the publication of a Finance Bill containing the new rules and, at the time of writing, we have not yet received confirmation that the new rules (when eventually enacted) will be backdated to April 1, 2017.

Putting the uncertainty around enactment to one side, the changes are a welcome development, and address some of the historic practical drawbacks of, and inherent complexities in applying, the SSE. As a result, the SSE will be simpler, and easier for everyone to access, although certain institutional investors (such as pension funds) are to be particularly well treated.

We expect that the competitiveness of the U.K. as a holding company jurisdiction should be greatly improved as a result of the reforms. The introduction of the SSE in 2002 marked a policy shift by the U.K. Government in that it effectively eliminated double tax on trading profits (once when the profits are realized by the trading company, and then again when the trading company is sold and the corporate shareholder is taxed on the gains). Unsurprisingly, the SSE’s appearance on the statute books was welcomed by taxpayers and helped make the U.K. a more attractive prospect as a holding company jurisdiction. That being said, there are a number of problems with the way the SSE works, which can materially undermine that attractiveness.

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