In this article, we’ve summarised some of the key areas likely to have a direct impact on tax planning in the months and years ahead.
The full collection of documents is available online at .GOV.UK.
- National insurance credit changes
- Repayment agents
- Help to save
- Modernisation of the stamp taxes on shares
- Reserved Investor Fund consultation
- Tax treatment of decentralised finance lending and staking
- Umbrella companies
- Off-payroll working (IR35)
- Construction industry scheme
- Employee ownership trusts
- Customs treatment of post and parcel exports
- Diverted profits tax, transfer pricing and permanent establishment reform
- Business tax debt modernisation
- Charities compliance measures
- Gift Aid
National insurance credit changes
Some eligible parents who have not claimed child benefit (mainly because of the impact of the high-income child benefit charge) are at risk of losing their future entitlement to a full state pension. The government plans to address this issue to enable affected parents to receive a national insurance credit retrospectively. Further details of next steps will be set out in due course.
Earlier this year, the government announced that income tax repayment agents would be required to register with HMRC. A deadline for registration of 2 August 2023 has now been confirmed, along with details of how agents need to register with HMRC and some exemptions available.
SAVINGS AND INVESTMENTS
Help to Save
In the Spring Budget 2023, the government announced that it was extending the Help to Save scheme in its current form to April 2025. The Treasury has now published a consultation on the scheme’s design to assess how it could be simplified and take up encouraged among its target low-income audience.
Modernisation of the stamp taxes on shares framework
The government has published a consultation on proposals to modernise and rationalise the framework for stamp taxes on shares. The consultation addresses issues such as whether to replace the current framework of stamp duty and stamp duty reserve tax with a single securities tax.
Reserved Investor Fund consultation
As part of a longer-term review of the UK investment funds regime, a consultation has been published by HMRC and the Treasury on a new type of investment fund: the Reserved Investor Fund (RIF). RIFs would be open to professional and institutional investors but not to a broader retail investment market. The paper focuses on the proposed scope and design of the tax regime for RIFs.
Tax treatment of decentralised finance lending and staking
A response to the call for evidence on the tax treatment of crypto-asset transactions in decentralised finance lending and staking has been published by the government. At the same time, a consultation has been issued on the potential for an amendment to the tax rules so they better reflect the substance of these arrangements – there are circumstances where the current capital gains tax rules are inconsistent with the substance of the activity.
Umbrella company market
A summary of responses will be published shortly to the 2021 call for evidence on the umbrella company market. This market has grown substantially since HMRC tightened the rules on off-payroll working. Simultaneously, the government will also publish a consultation on policy options to regulate and tackle non-compliance in the umbrella company market.
The government has published a consultation on a potential legislative change to deal with the over-collection of tax that can arise when the off-payroll working rules (sometimes called IR35) are not complied with.
In such circumstances, the deemed employer is liable for the full PAYE liability due on the worker’s income, but the worker and their personal service company may have already paid tax and national insurance contributions (NICs) on the same income.
The consultation suggests a potential change to allow HMRC to set off the worker’s tax and NICs already paid against the employer’s PAYE liability.
Construction industry scheme
A new consultation paper proposes a package of reforms to the construction industry scheme (CIS). These include strengthening the tests for gross payment status (GPS), principally by including VAT in the compliance test when considering qualification and retention of GPS. It also considers administrative simplifications, such as excluding from the CIS most payments made by commercial landlords to tenants.
Employee ownership trusts
Later this year, the government will publish a consultation on the use and effectiveness of the employee ownership trust tax regime. This will aim to ensure the available reliefs are operating as intended and not being used for unintended tax planning purposes.
Customs treatment of post and parcel exports
The government has published a consultation on proposals to improve the customs treatment of post and parcel exports focusing on low-value post and parcels.
Diverted profits tax, transfer pricing and permanent establishment reform
In May 2023, the government will publish a consultation on simplifying and updating legislation covering:
- diverted profits tax (increased rate on diverted UK profits);
- transfer pricing (related party transactions); and
- permanent establishments (right to tax non-resident entities with a UK business presence).
Business tax debt modernisation
The government has published a summary of responses to an earlier consultation on modernising tax debt collection from non-paying businesses. Further investigation of the approach to modernising HMRC’s powers in this area is now planned.
Charities compliance measures
The government has published a consultation on tax compliance within the charity sector as it believes “some rules are not working as intended”. The consultation covers a range of areas, including:
- preventing donors from obtaining a financial benefit from their donation;
- preventing abuse of the charitable investment rules;
- closing a gap in non-charitable expenditure rules; and
- sanctioning charities that do not meet their filing and payment obligations.
The government says that it will continue to engage with the charities sector to improve the way Gift Aid works to minimise administrative burdens through the use of digital technology. However, no specific papers or promise of future proposals were released.
We will be monitoring the outcomes of the various consultations, calls for papers and future announcements to assess the implications for our clients. The proposals are in any event subject to amendment before the Finance Act. We will share our conclusions and advice on our website, in our Shipshape magazines, and in our conversations with clients.
In the meantime, if you wish to discuss how any of the day’s announcements impact you, please do talk with your usual Shipleys’ contact.
Specific advice should be obtained before taking action, or refraining from taking action, on the basis of this information.
© 2023 Shipleys LLP