The Government has published draft legislation ahead of the Autumn Finance Bill 20-21, which includes a selection of draft clauses together with consultations trialled at the Spring Budget.
The draft legislation includes details of significant extensions to the Making Tax Digital (MTD) regime, a further clamping down on promoters and enablers of tax avoidance scheme, new tax proposals, plus much more.
Here, we take a look at some of the changes which are under review or set to be implemented this Autumn. A more detailed, comprehensive list of all ongoing consultations can be found on the government website by clicking here.
Consultations
Proposed extension of Making Tax Digital (MTD)
The government has announced plans to continue to extend its MTD regime, aiding its long-term plans for a wider tax administration reform, intended to simplify the tax system. Forming part of the governments vision of a modern, digital tax administration system that is fit for the 21st century, the proposed changes include:
- Autumn 2020 – the government will consult on extending MTD to incorporated businesses with corporate tax obligations
- April 2022 – MTD extended to all businesses below the VAT threshold (currently only applicable to those operating above the £85,000 VAT threshold)
- April 2023 – MTD extended totaxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually
Review of business rates
The government plans to review the way business rates are currently handled with the aim of simplifying reliefs.
As part of this, the next revaluation of non-domestic property in England will now take effect in April 2023. To accurately reflect the impact of coronavirus, it will be based on property values as of 1 April 2021.
Legislation
INCOME TAX
Enterprise Management Incentives
A new clause will be added so that employees are not disqualified from the relief as a result of taking leave, being furloughed or working reduced hours because of coronavirus, for the period 19 March 2020 – 5 April 2021.
Termination payments
This measure will provide an alternative Post-Employment Notice Period (PENP) calculation where an employee’s pay period is defined in months, but their contractual, or post-employment notice period is not a complete number of months.
This measure will also align the tax treatment of PENP for individuals who are non-residents in the year of termination of their UK employment, with the treatment for all UK residents. Currently, PENP is not chargeable to UK tax if an employee is non-resident for the tax year in which their employment terminates and, this change affects those who performed their employment in the UK.
Pension schemes
A new measure will set out the tax treatment of collective money purchase benefits, to enable them to operate in the same way as existing registered pension schemes.
STAMP DUTY LAND TAX RATES (SDLT)
New rates of SDLT for non-UK residents from 1 April 2021
A measure will introduce an additional 2% SDLT charge for non-UK resident buyers of residential property, which is set to be introduced from 1 April 2021.
New reliefs from Annual Tax on Enveloped Dwellings (ATED) for housing co-operatives
Draft legislation that will provide housing cooperatives that are not registered providers of social housing with an ATED exemption.
CORPORATION TAX
Corporate Interest Restriction (CIR)
A technical amendment to legislation will clarify special provisions for real estate investment trusts (REITs). From 21 July 2020, non-resident subsidiaries of REIT’s fall under the corporate interest restriction rules.
A second amendment, applicable from 1 April 2017 ensures no penalties arise for the late filing of a CIR where there is a reasonable excuse.
OTHER
Tax avoidance
Draft legislation will be published, building on previously introduced schemes, to give HMRC further powers to prevent the promotion and enabling of certain types of tax avoidance.
Amendments to HMRC’s civil information powers
Aiming to improve the efficiency of exchange of tax information, this measure provides HMRC with new powers to issue a ‘financial institution notice’ (FIN) without the need for approval from the tax tribunal, which requires financial institutions to provide information about a specific taxpayer.
Delayed draft legislation
On 28 April 2020, HMRC announced extensions to several consultation deadlines, due to COVID-19, to allow sufficient time for full engagement and for stakeholders to submit their views. As a result, draft legislation for these measures will be published in the Autumn.
These include:
- Plastic Packaging Tax
- R&D SME Tax Credit PAYE Cap
- Construction Industry Scheme abuse
- Notification of uncertain tax treatment by large businesses in response to the COVID-19 outbreak
We will continue to publish updates in relation to the Finance Bill 20-21 as they’re announced, but to ensure you’re kept up to date, you can sign up to our mailing list by clicking here.
Alternatively, if would like any further information on how any of these changes may impact you or your business in the meantime, please get in touch with a member of our specialist tax team.
