The saying “the devil is in the detail” is never truer than on Budget day. Although the Chancellor’s speech was fairly light in terms of tax, that can’t be said for the accompanying budget publications which featured a range of miscellaneous measures. One change buried in the detail sets out that from 6 April 2024, land situated in an EEA state, the Channel Islands, or the Isle of Man will no longer qualify for agricultural property relief or woodlands relief for inheritance tax purposes.
A Call for Evidence will be launched in Summer 2023 on informal and ad hoc flexible working “to better understand informal agreements on flexible working between employees and employers”. And it was also confirmed that a further set of tax administration and maintenance announcements will be made later in the spring at a “Tax Administration and Maintenance Day”, the date for which has not yet been announced.
The following also featured in the Spring Budget announcements:-
- Social investment tax relief will end as planned next month in April 2023. New investments made on or after 6 April 2023 will therefore not qualify for income and capital gains tax relief;
- A Call for Evidence will be launched on the Share Incentive Plan and Save As You Earn employee share schemes in order to “consider opportunities to improve and simplify the schemes”;
- Page 78 of the main Budget publication provides confirmation of various rates and thresholds;
- A new power will be introduced to enable the tax treatment of new payments, or new top-up welfare payments, introduced by the devolved administrations, to be confirmed as social security income;
- Related to this, the government will clarify that the Scottish Government’s Carer Support Payment, announced on 7 February 2023, is taxable social security income;
- Income tax, national insurance contributions and capital gains tax exemptions will be available to group litigation order compensation payments received as a result of the Post Office Horizons scandal;
- A Call for Evidence has been published which explores both the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax to cover certain types of environmental land management;
- The government will formalise and extend an existing income tax concession for low-income trusts and estates and provide further changes to make calculations and reporting more straightforward. HMRC also intends to make changes to inheritance tax regulations to remove non-taxpaying trusts from reporting requirements;
- As announced at the Autumn Statement 2022, and following the publication of draft legislation on 20 December 2022, the government will legislate for the Electricity Generator Levy. The final legislation will include indexation of the benchmark price, the recognition of a limited set of exceptional costs relating to the acquisition of generation fuel, which can be set against exceptional receipts, and rules for joint ventures;
- The government will be making a number of modifications to the Corporate Interest Restriction rules which will take effect for periods of account commencing on or after 1 April 2023;
- Amendments will be made to the Real Estate Investment Trusts (“REITs”) regime to enhance its competitiveness. In addition to changes announced in the Edinburgh Reforms launched on 9 December 2022, the government will also reduce administrative burdens for certain partnerships investing in REITs. The changes will variously apply from 1 April 2023 and Royal Assent of the Spring Finance Bill 2023;
- Following the introduction of the Qualifying Asset Holding Companies (“QAHC”) tax regime from April 2022, legislation will be introduced to make some targeted changes so that the regime is more widely available to investment fund structures which fall within its intended scope and to ensure the rules better achieve their intended effect. Changes will variously take effect from Royal Assent of the Spring Finance Bill 2023, 20 July 2022 and 15 March 2023, or are deemed to have always had effect. The QAHC regime was introduced by Finance Act 2022 to recognise circumstances where an intermediate asset holding company is used to facilitate the flow of capital, income and gains between investors and underlying assets;
- The genuine diversity of ownership (“GDO”) condition in the QAHC, REITs and Non-Resident Capital Gains Tax regimes is intended to prevent funds that are only open to a small number of predetermined investors from benefiting from those regimes. With effect from Royal Assent to the Spring Finance Bill 2023, this condition will be changed to improve its operation for fund structures involving multiple pooling vehicles;
- A new elective accruals basis of taxation for carried interest will be introduced and will be retrospectively available from 6 April 2022 to allow UK resident investment managers to accelerate their tax liabilities in order to align with the timing for double taxation relief purposes;
- The government has published a response to the Call for Evidence on aspects of landfill tax, which closed in February 2022. This confirms that engagement with stakeholders will continue before making any announcements are made;
- A new reformed heavy goods vehicle (“HGV”) levy will be introduced from August 2023 following the planned end of the current levy suspension period. The reformed levy is designed to reflect the environmental performance of the vehicle and the levy is to apply to all HGVs using the UK road network;
- The process to grant options under an Enterprise Management Incentive (“EMI”) scheme is to be simplified. From April 2023, the requirement for a company to set out details of share restrictions within the option agreement and the requirement for a company to declare an employee has signed a working time declaration will be removed. From April 2024, the government will extend the deadline for a company to notify HMRC of the grant of an EMI option from 92 days following grant, to the 6 July following the end of the tax year;
- IT systems will be introduced to enable tax agents to payroll benefits in kind on behalf of employer clients;
- The government will introduce legislation in a future Finance Bill to establish the tax treatment of payments made into decommissioning funds by oil and gas companies in relation to the repurposing of oil and gas assets for use in CCUS projects; and
- Legislation is included in the Spring Finance Bill 2023 to allow relief from the annual tax on enveloped dwellings (“ATED”) and the 15 percent rate of Stamp Duty Land Tax (“SDLT”) for companies which make a dwelling available for occupation by refugees under the Homes for Ukraine Sponsorship Scheme. This legislation will apply retrospectively from 1 April 2022 for ATED and 31 March 2022 for SDLT.