Research institute spinout companies
If an employee of a research institution (RI) acquires shares in a spinout company to which the RI has transferred intellectual property, an income tax and national insurance charge could arise under the employment-related securities provisions. This has contributed to a significant reduction in the number of new spinouts. The value of intellectual property on transfer to the spinout company will be disregarded from 2 December 2004, thereby avoiding an immediate tax and NIC charge. For spinout companies set up before 2 December 2004, there will be an opportunity to elect before 15 October 2005 that income tax and NIC liabilities will not be payable unless and until the company is successful.

International accounting standards
Technical amendments will be made to the Finance Act 2004 legislation and to regulations made in December 2004. These reflect recent developments in both IAS and UK Generally Accepted Accounting Practice and correct some errors and omissions in the previous legislation. The changes will generally have effect for periods beginning on or after 1 January 2005, the earliest date from which companies are permitted to use IAS to draw up their accounts.

An anti-avoidance measure will also be introduced to prevent companies taking advantage of the announcement made in the Pre-Budget Report that transitional adjustments would be deferred until 2006 at the earliest. This will apply from 14 December 2004.

Film tax relief
Tax relief for low budget qualifying British films (s48 relief), which was due to expire on 1 July 2005, will be extended until 31 March 2006. This extension will enable films to qualify for current tax relief, where the first day of principal photography is before 1 April 2006 and the film is completed before 1 January 2007. Acquisition relief will continue to be available for films that meet these conditions and are acquired before 1 October 2007.

The Pre-Budget Report announced measures to counter tax avoidance schemes based on film production and acquisition. These included schemes which allowed relief to be claimed more than once on a single film, used arrangements to defer tax for over 15 years and enabled partnerships to obtain loss relief for money that was not fully at risk. The relevant legislation will generally be effective from 2 December 2004.

Renovation of business premises
A new Business Premises Renovation Allowance scheme will provide 100% first-year allowances for capital expenditure on renovating or converting vacant business properties in designated disadvantaged areas. The scheme will apply if the EU grants state aid approval.

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