Ahead of next month’s election, the Institute for Fiscal Studies recently published an article on reform of Inheritance Tax and an assessment of the previous government’s record on tax between 2010 and 2024. HMRC is currently conducting taxpayer education research and its latest schedule of live and recorded webinars for tax agents is available for booking. Spaces are limited, so take a look now and save your place. And finally, Belarus has unilaterally suspended its Double Tax Agreement with the UK, although the UK considers it to still be in force.
Institute for Fiscal Studies publications
The Institute for Fiscal Studies (“IFS”) has published an article on options to make inheritance tax (“IHT”) fairer which it says would also raise more revenue. In the article, the IFS notes that despite the highest rate being 40 percent, the availability of reliefs and exemptions means that the effective rate of IHT peaks at 25 percent for estates worth between £3 million and £7.5 million and declines to just 17 percent on estates worth £10 million or more.
The article also considers the potential impact of removing the special treatment of AIM shares, imposing a cap on agricultural and business property relief, and ending the tax-free passing-on of pension pots.
The IFS has also published an assessment of the government’s record on tax between 2010 and 2024. Not surprisingly, it notes that a common theme has been a move towards greater complexity. Since 2010, more than a dozen new taxes have been introduced and many existing taxes have been made more complicated. The IFS notes that, taken together, the changes have ‘made the tax system harder to understand and harder for taxpayers to navigate’.
HMRC taxpayer education research
HMRC has recently updated its guidance on genuine HMRC contact to flag that it is currently conducting a new research initiative. As a result, taxpayers may be contacted by HMRC or by People for Research with an invitation for them to take voluntarily participate in a focus group to understand how HMRC can improve education for taxpayers.
Belarus unilaterally suspends Double Taxation Agreement with the UK
Last month, HMRC confirmed in an update on GOV.UK that Belarus Council of Ministers has unilaterally suspended provisions of many of its Double Tax Agreements, including the 2017 UK-Belarus Double Taxation Convention. 27 countries have been impacted with provisions affected from 1 June 2024.
The Council Resolution has suspended provisions relating to dividends, interest, and capital gains. The same Resolution also introduces discriminatory taxes on dividends and other income in respect of businesses located in one of the 27 countries with effect from 1 April 2024. This means that Belarus is not honouring agreed limits on what it may tax at source and has placed other restrictions on the conduct of business by non-Belarusians in Belarus.
The UK-Belarus Convention does not permit this unilateral action. The UK Government views this action with utmost seriousness and has asked Belarus to reverse its action. It considers the treaty to remain in force and is continuing to comply with its terms. Next steps are being considered and more information will be provided in due course.
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