After much speculation and three weeks on from Rishi Sunak’s Spring Budget, a series of papers were published in a low-key manner by the Government on 23 March 2021 – dubbed “Tax Day” by the press (and tax pundits alike).
Despite more than 30 tax updates being published, the headline announcements haven’t lived up to the hype that preceded them.
We’ve summarised some of what the releases did and, more significantly did not say, below. And if you want to read the detail, you can do so here, although we have warned you!
Capital Gains Tax
It’s been reported for some time that the Government was looking to increase CGT rates, perhaps even aligning them to income tax rates. Well not yet – the Budget offered no announcements on this, and neither did this Tax Day – the consultations were deafeningly silent on CGT.
Perhaps the rumours were wrong, or maybe we’ll hear more on this down the line. For now, this is good news for business owners and investors alike, who plan to make capital disposals.
Tax admin & payments
The Government wants to update and improve the tax system, making tax more straightforward to pay and harder to get wrong. Two separate calls for evidence have been published, requesting views by 13 July 2021, on:
- The tax administration framework – the core legislation, processes and guidance which underpin obligations for HMRC, taxpayers, agents and third parties. Views are being sought on how the framework could be reformed as part of the Government’s commitment to creating a trusted, modern tax administration system.
- Timely tax payments – views are requested on the idea of more frequent payment of self-assessment income tax and corporation tax (for small companies). They could look to align tax payment dates closer to when profit is made, based on in-year information.
A promise has been made to reduce the paperwork and red tape for those dealing with inheritance tax. From 1 January 2022, over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms. In the same fashion, a current temporary provision for inheritance tax returns to be provided without physical signatures from all those involved, will be made permanent.
Residential property developer tax
A consultation will be published relating to a new tax on “the largest” residential property developers. The tax will be introduced in 2022 to help pay for the costs of cladding remediation. The consultation will be published in the coming months.
Back in 2018, the Government carried out a consultation around trust tax. The responses to this have now been published. In a nutshell, there is no desire for a comprehensive reform of trust tax at this stage.
A consultation on simplifying VAT Partial Exemption rules, and the associated Capital Goods Scheme, was carried out in 2019. In light of the responses received, HMRC intends to update their internal systems to simplify the existing process.
A transfer pricing consultation has been published, seeking views by 1 June 2021. The Government is looking at the current requirements for businesses to maintain transfer pricing documentation, and whether these should be updated.
A question of ‘wait and see’
To sum up, there was not a great deal of substance revealed on the first Tax Day. What there was, however, was a series of signs of intent. No doubt, post-consultation, we’ll all be a little bit the wiser.