Today’s Autumn Budget tinkered at the edges of the UK tax regime with announcements on the annual investment allowance limit, the new residential property developers tax, R&D tax relief, creative sector reliefs and various duties. Northern Ireland specific matters are also featured in today’s announcements. We also understand that the Government will bring forward a further set of tax administration and maintenance announcements later in the autumn. This follows a similar set of announcements on 23 March 2021 after the Spring Budget. There were no changes to capital gains tax (“CGT”) rates despite the Office of Tax Simplification’s (“OTS”) November 2020 report nor did any changes on inheritance tax materialise as potentially expected following another OTS review. Green taxes also did not feature on the day and there were no tax increases in other areas. However readers are reminded of the changes to national insurance and dividend tax rates announced last month which will take effect from April 2022. Annual investment allowance limit At the Spring Budget the Chancellor confirmed that the annual investment allowance limit for expenditure on plant and machinery and integral features would remain at £1 million until 31 December 2021 after which it would fall to £200,000.  Today’s Autumn Budget announced that there will be no reduction from 1 January 2022 and that the limit will remain at £1 million until 31 March 2023. It should be noted that the AIA is available to both companies and unincorporated businesses however the super-deduction and 50% first year allowance announced at the Spring Budget which are available until 31 March 2023 are only available to companies. Residential property developer tax More information was provided on the new residential property developers tax (“RPDT”) announced in February 2021 for which draft legislation was published last month. The tax will be charged at 4 percent on profits exceeding an annual allowance of £25 million. The RPDT applies to profits arising in accounting periods ending on or after 1 April 2022. R&D tax relief Following consultation and as recommended by this Institute, the categories of qualifying expenditure for R&D tax relief purposes are to be expanded to include data and cloud costs. The budget documents also confirm that reforms will be implemented “to more effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK, and to target abuse and improve compliance.” The Chancellor’s speech referred to this as focusing R&D tax reliefs on domestic activity taking place in the UK. These changes will be legislated for in Finance Bill 2022/23 and will take effect from April 2023. Further details of these changes and next steps will be set out as part of the Government’s further tax administration and maintenance announcements later in the autumn. Creative sector reliefs  A number of changes were announced to the various creative sector tax reliefs. The museums, galleries and exhibitions tax relief (“MGETR”) which had a sunset clause of 31 March 2022 is now extended a further two years and will now end on 31 March 2024. From 27 October 2021, the headline rates of relief for theatre tax relief (“TTR”), orchestra tax relief (“OTR”) and MGETR will temporarily increase from 20 percent (for non-touring productions) and 25 percent (for touring productions) to 45 percent and 50 percent, respectively. From 1 April 2023, the rates will be reduced to 30 percent and 35 percent and will return to 20 percent and 25 percent on 1 April 2024. For MGETR, the relief will expire on 1 April 2024 and no expenditure from this date will be eligible for relief. Also from 27 October 2021, OTR rates will temporarily increase from 25 percent to 50 percent, reducing to 35 percent from 1 April 2023 and returning to 25 percent on 1 April 2024. And from 1 April 2022, “changes will be made to better target MGETR, TTR and OTR and ensure that they continue to be safeguarded from abuse.” Cross-border group relief Now that the UK has left the EU, Finance Bill 2021/22 will abolish cross-border group relief and other related loss reliefs from 27 October 2021. These reliefs were introduced as a result of the CJEU case Marks and Spencer v Halsey which is heralded as being responsible for the introduction of cross-border group relief in various countries across the EU including the UK which introduced its provisions in Finance Act 2006. CGT UK residential property disposals The time limit for making a CGT return and the associated CGT payment on a disposal of UK land and property is now extended from 30 days to 60 days. This takes into consideration feedback from stakeholders, including this Institute, in respect of problems experienced with the 30 day reporting and payment system. This means that taxpayers with a completion date on or after 27 October 2021 now have 60 days to report and pay any tax due on the disposal The reporting and payment date remains at 30 days for transactions completed up to 27 October 2021. Additionally, changes have been made to the legislation to help clarify the mixed use property rules. This is to ensure that where a gain arises to UK residents in relation to a mixed use property, that only the portion of the gain that is the residential property gain is to be reported and paid in line with these deadlines.  More detail on the tax measures in today’s Budget will feature in Monday’s edition of Chartered Accountants Tax News. Further information on today’s announcements is also available on the HM Treasury and HMRC websites.  

Revenue has provided the Institute with clarifications on a number of points related to the expanded debt warehousing scheme following the update provided by the Collector General’s Division to Chartered Accountants Ireland on how certain directors and employees with a “material interest” in their employer company will be allowed warehouse income tax liabilities relating to their Schedule E income from that company. Revenue confirmed that where the Schedule E liability has been warehoused as a result of section 997A TCA 1997, interest will not arise on the 2020 preliminary tax underpaid as a result of the Schedule E liability. In circumstances where the Schedule E (PAYE) liability will be warehoused, the taxpayer will avail of the warehousing interest rates. This is subject to the taxpayer continuing to satisfy the debt warehousing scheme requirements e.g., filing tax returns by the due date as they arise. See here for information on the debt warehousing scheme. Revenue confirmed that for preliminary tax 2021, the director may warehouse their Schedule E (PAYE) liability, the portion of which has been warehoused by the employer company, subject to meeting the conditions previously outlined i.e. where a director / employee has a “material interest” in the company that pays their emoluments, and section 997A TCA means the director / employee is not entitled to a credit for the tax deducted due to the company warehousing its PAYE (Employer) liabilities, and the director/employee does not satisfy the 25% reduction of income threshold to avail of income tax debt warehousing. Revenue also confirmed that directors who warehouse their Schedule E liability under the terms of the expanded warehousing scheme can avail of the extended filing date of 17 November 2021, where the return is filed via ROS and the non-Schedule E liability payment is made via ROS on or before 17 November 2021 For those who have already filed their 2020 Form 11, and wish to avail of the expanded warehousing scheme, Revenue advises that: Where a director has already filed their 2020 income tax return prior to the Budget Day announcement and the director satisfies the requirements as outlined to avail of debt warehousing for only their Schedule E (PAYE) liability which has been warehoused by the employer company, they may submit a request via MyEnquiries outlining that they wish to warehouse their Schedule E (PAYE) liability. The taxpayer should submit a request via MyEnquiries using the following pathway when submitting the notification: MyEnquiries – Select “Collector General’s” and More Specifically “General Query” The notification should outline the specific circumstances of the case and confirm that the taxpayer satisfies the conditions to avail of debt warehousing for their Schedule E (PAYE) liability which has been warehoused by the employer company. The notification must outline the amount of Schedule E (PAYE) liability which the taxpayer wishes to warehouse and must include confirmation that the non-Schedule E liability has been paid. The taxpayer must include the following declaration in the notification: “Although my income has not reduced by 25% when compared to 2019, I wish to warehouse my Schedule E (PAYE) liability in respect of the tax deducted from director emoluments as set out in my Income Tax return on the basis that I am restricted by Section 997A TCA 1997 from claiming credit for tax deducted from those emoluments as a result of my employer company warehousing their PAYE (Employer) liabilities.”

Revenue published its Budget 2022 summary, detailing the key measures in the Budget Statement of 12 October 2021. Revenue Summary