Our summary provides an overview of the key announcements arising from the Chancellor’s speech, and how they are likely to impact your business and personal finances.
Please get in touch with your usual haysmacintyre contact or any member of the Tax team, if you have any queries.
The tax announcements include:
Further details to follow in our full summary.
Please contact Katharine Arthur, Partner and Head of Private Client, with any queries.
The government will legislate in Finance Bill 2021-22 to introduce additional elements to the VAT free zone model for Freeports.
The legislation will:
The measure will take effect from 3 November 2021.
The Implementation of VAT rules in free zones tax information and impact note provides more information.
Pending the introduction of a long term solution, it was announced that the government will legislate in Finance Bill 2021-22 to extend the VAT margin scheme to apply in Northern Ireland on a limited basis, in respect of motor vehicles sourced from Great Britain, for the period until the Second-hand Motor Vehicle Export Refund Scheme is implemented. As a result, motor vehicles first registered in the United Kingdom prior to 1 January 2021 will be available to sell under the VAT margin scheme in Northern Ireland during that time period.
This measure would take effect, should a relevant agreement be reached with the EU and will apply retrospectively from 1 January 2021.
The Northern Ireland second-hand margin scheme interim arrangement tax information and impact note provides more information.
Following on from the above, a more long term measure was announced whereby the government will legislate in Finance Bill 2021-22 to be able to introduce a Second-hand Motor Vehicle Export Refund Scheme. Businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export.
This will ensure that Northern Ireland motor vehicle dealers will remain in a comparable position to those applying the VAT margin scheme elsewhere in the UK. Further details regarding the arrangements of the scheme will be provided in due course, including any regulations brought forward to give it effect.
The Second-hand Motor Vehicle Export Refund Scheme tax information and impact note provides more information.
The government will legislate in Finance Bill 2021-22 to extend the current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals or dental technicians to imports of dental prostheses by these persons. This will ensure that the VAT treatment for such prostheses supplied into and within the United Kingdom, including between Great Britain and Northern Ireland, is consistent. This measure will take effect on or after the date of Royal Assent of Finance Bill 2021 and will apply retrospectively from 1 January 2021.
The VAT Exemption for dental prostheses imports tax information and impact note provides more information.
Lastly, the government has announced a consultation on options to simplify the VAT treatment of fund management fees. The announced consultation follows on from the wider review of UK funds regime by HM Treasury in January 2021. At this stage, the consultation will simply look to take views and opinions as there are no imminent plans for VAT rule changes (that we are aware of) by HMRC. We will of course update our clients once the consultation details are published and would invite comments and feedback accordingly.
HMRC have been piling pressure on both the users and promoters of avoidance schemes recently. They have set up specialist teams to tackle these, challenging them through the Courts, offering settlement opportunities to participants as an ‘out’ in exchange for paying the lost tax plus interest and introducing penalties for those who have promoted avoidance schemes.
The measures introduced here are:
These measures strengthen HMRC’s position in tackling avoidance and show the direction of travel towards their aim of stamping it out completely.
HMRC’s ‘discovery’ powers allow HMRC to make an assessment to recover tax when an insufficiency is discovered in prior tax years, subject to certain time limits. This is a powerful weapon in HMRC’s arsenal, and is commonly used in compliance cases
Recently, HMRC has faced challenges through the tax tribunal that the discovery powers cannot apply to each of the Higher Income Child Benefit Charge (HICBC), Gift Aid (where the donor has paid insufficient tax to cover the tax being reclaimed) and certain pension charges.
In order to address this, the new measure introduced clarifies the original legislation at section 29 of the Taxes Management Act 1970 and confirms that it does apply to HICBC, Gift Aid and pension charges, whilst also confirming that individuals chargeable to these income tax charges need to notify HMRC.
This measure is stated to enable the government to support taxpayers in the event of “a disaster or emergency of national significance as determined by HM Treasury”. It is explained covid-19 highlighted the limited scope and difficulties in making changes to the current benefits in kind and expenses tax system to be able to respond quickly to the pandemic. The examples which were given were:
Whilst the policy paper is not specific in the scenarios which may necessitate such a modification, we expect this would be in situations such as medical benefits or reimbursements for home office equipment during COVID-19.
I am pleased to share our full summary of the 2021 Autumn Budget and Spending Review.
In a tax and spend Budget, the Chancellor, Rishi Sunak, set out the Government’s plans. Previously announced tax increases, including to Corporation Tax and the new Health and Social Care Levy, mean that the tax burden is now at its highest since the early 1950s, and Government spending is at its highest since the 1970s. The Chancellor concluded his speech with a pledge to reduce taxes by the end of this Parliament.
Our Budget summary provides an overview of the key announcements arising from the Chancellor’s speech, and how they are likely to impact your business and personal finances.
You can download our full summary in pdf format below. Please get in touch with your usual haysmacintyre contact or any member of the Tax team, if you have any queries.
The key tax announcements include:
Our detailed summary will follow tomorrow morning. Please do not hesitate to get in touch with a member of our Tax team, your usual haysmacintyre contact or Katharine Arthur if you have any queries.
The Chancellor, Rishi Sunak, set out the Government’s tax and spending plans for the year ahead, announcing further support for jobs and businesses through to autumn, and beyond. With the freezing of many tax thresholds and allowances, the Chancellor is relying on fiscal drag and an earlier than hoped economic recovery to begin to balance the books and plan for the future.
Many key tax decisions have been postponed for now, save for an increase to the headline Corporation Tax rate to 25% from April 2023, and the introduction of a ‘super-deduction’ of 130% for qualifying capital spend by businesses. Companies will also welcome the enhanced ability to carry back losses to access repayments of tax from earlier this year.
Our Budget summary provides an overview of the key announcements arising from the Chancellor’s speech, and how they are likely to impact your business and personal finances.
We expect there are more changes to come. HMRC will publish a Command Paper on 23 March, with details of a number of consultations.
As we begin to dare hope of a return to a semblance of normal life as COVID-19 restrictions are eased, I hope you, your family and colleagues are well.
You can download our full summary below. Please get in touch with your usual haysmacintyre contact or any member of the Tax team, if you have any queries.
Our more detailed summary will follow tomorrow morning. Please do not hesitate to get in touch with a member of our Tax team or your usual haysmacintyre contact if you have any queries.
It will then increase to 12.5% until 31 March 2022, before returning to the standard-rate of 20%.
The VAT registration threshold remains frozen at £85,000 of taxable turnover until April 2024.
As previously announced, Making Tax Digital will be extended to all VAT registered business from 1 April 2022.
A new points-based penalty for the late submission of VAT returns will be introduced. Businesses will incur a £200 penalty for each late submission after a points threshold has been reached.
A percentage based penalty will be introduced for late payments of VAT: no penalty due on tax paid within 15 days of when it was supposed to be paid; a penalty of 2% if it is paid within 30 days of when it was supposed to be paid; 4% on tax paid more than 30 days late, followed by a further 4% penalty calculated on a daily basis from day 31 onwards.
VAT interest provisions will be aligned with income tax with late payment interest also payable on amounts not paid by the due date until the tax has been paid.
Please contact Phil Salmon, another member of the VAT team, or your usual haysmacintyre contact for further details and assistance in relation to the above.
Today’s Budget includes a repeal of the UK’s domestic legislation implementing the EU Interest and Royalties Directive (IRD), effective from 1 June 2021. This legislation (sections 757 to 767 of the Income Tax (Trading and Other Income) Act 2005) provided an exemption from withholding tax on intra-group interest and royalty payments from UK to EU companies. Taxpayers should therefore carefully check their agreements for interest-bearing investments and royalty agreements, for the impact of any ‘grossing up’ clauses, to determine whether they will be required to make increased royalty payments as a result of the withholding tax now charged.
The IRD removed the need to impose withholding taxes on payments of interest and royalties between associated companies within the EU. ‘Associated’ is defined differently to the normal Corporation Tax definition:
Or, a third company also resident in the UK or EU must hold directly:
From 1 January 2021, the UK could no longer benefit from the IRD – this immediately had an impact for payments made from EU member states to the UK. Instead, companies must refer to the terms of the applicable double taxation agreement between the UK and the relevant EU member state to determine the appropriate rate of withholding tax to apply. Up until today’s announcement, the provision was retained in domestic law and therefore interest and royalties paid from the UK to an EU member state still had a withholding tax rate of nil.
For companies that relied on this provision, the relevant double taxation treaty must be checked for the correct treaty rate going forward. In double taxation agreements with several EU jurisdictions the minimum withholding rate is more than 0%.
If you have any questions, please speak to a member of our Tax team or your usual haysmacintyre contact.
