The Treasury and Chancellor previously suggested that more effective tax changes would be introduced after undertaking consultation and seeking comment on the output from such consultation exercises. Therefore, instead of this being lost in the Budget Announcement a separate date, Tax Day, was set for the consultation announcements to be delivered – 23 March 21.
With Covid’s effect on the economy continuing, and The Chancellor avoiding significant tax changes in the Spring Budget Announcement earlier in March, many operating in the tax advisory industry believed the anticipated changes, needed to contribute to the cost of Covid, affecting many mainstream taxes would be announced on the 23rd.
Tax Day arrived on 23 March 2021 with a fanfare but the anticipated proposed changes did not.
Instead, what was delivered was a summary of the Treasury’s future tax policy goals. Although these are very important, they are not what the industry knew taxpayers needed to understand in order to plan for how the anticipated tax increases will affect their finances and businesses.
There was no mention of the changes recommended by The Office of Tax Simplification in their report on Capital Gains Tax (‘CGT’) in late 2020 and Inheritance Tax (‘IHT’)in 2019. As a result, we are no closer to understanding if CGT increases will be introduced, if the mechanism for calculating IHT will change and whether current relief from both CGT and IHT, such as the previously referred to Entrepreneurs’ Relief from CGT or Business Relief for IHT will continue to be available.
Additionally, Social Media widely anticipated further changes to the rules dealing with tax relief on pensions contributions and pension extractions; no mention of this appeared in any publication on Tax Day.
What we did get was a number of promises and the Treasury committing to:
- Consider if Transfer Pricing documentation requirements for UK companies are fit for purpose.
- Consider changing tax legislation in April 2022 to introduce an obligation for large businesses to disclose to HMRC if they have pursued a tax position that HMRC may not agree with.
- Keeping under review whether any changes are needed to simplify Partial Exemption rules and the Capital Goods Scheme.
- Confirming that after considering the results of a Consultation on the taxation of trusts there is no need to change the method through which trusts are taxed.
- Easing the Inheritance Tax reporting burden for many estates from January 2022.
- Looking to accelerate the time of payment for tax for those with income not subject to PAYE and NIC.
- Continue to move the tax system toward a digital model fit for the digitised 21st
- Invest time and effort in preventing the avoidance of tax and ensuring tax advisers are subject to standards intended to raise the standard of tax advice in the market.
In short, the content of any tax changes will not be understood until the Chancellor’s Autumn Budget Statement of 2021 when we should expect some tax increases to contribute to the cost of the UK’s Covid Support Schemes. We will keep you updated through our Social Media channels should there be any confirmed changes trailed by the Treasury.
If you have any questions at all please contact Derek Gemmell or your usual AAB contact.
Find out more about AAB's Corporate Tax team here.