The first increase in seven years to the VAT registration threshold, further enhancements to the various creative sector reliefs and the inclusion of leased assets in the full expensing regime (when fiscal conditions allow) were the key business taxes announcements. HMRC has published updated guidance around the tax deductibility of training costs for sole traders and the self-employed. And the government is also extending the Energy Profits Levy by an additional year to March 2029, which should raise £1.5 billion. HMRC are also to establish an expert panel to assist in the administration of R&D tax reliefs. In a meeting on Budget Day with HMRC, Chartered Accountants Ireland requested more details on this and was advised that this will be provided in due course. VAT thresholds From 1 April 2024, the current £85,000 VAT registration threshold will increase to £90,000, the first increase since April 2017. The Chancellor’s aim here is to ensure that the UK continues to have one of the highest thresholds in the OECD. According to the main budget publication, over 28,000 businesses will benefit in 2024/25 from no longer being VAT registered. The de-registration threshold will also increase from £83,000 to £88,000 from 1 April 2024. Full expensing to be extended to leased assets Full expensing for companies was made permanent in the Autumn Statement 2023. These capital allowances are currently only available to companies incurring expenditure on new plant and machinery (with some exclusions). The Chancellor announced today that full expensing will be extended to leasing when fiscal conditions allow. Draft legislation on this extension will be published shortly. Creative sector tax reliefs A UK independent film tax credit will be introduced at a rate of 53 percent on qualifying film production expenditure. This enhanced audio-visual expenditure credit will be available for films with budgets under £15 million that meet the requirements of a new British Film Institute test. Productions will be able to make claims from 1 April 2025, in respect of expenditure incurred from 1 April 2024 onwards provided that films started principal photography from 1 April 2024. Following a call for evidence at Autumn Statement 2023, the credit rate for visual effects costs in film and high-end TV will be increased to 39 percent from April 2025, and the 80 percent cap will be removed for qualifying expenditure for visual effects costs. The government will also consult on the types of expenditure that will be in scope for the additional tax relief which will be implemented via a future Finance Bill. And finally, from 1 April 2025, the rates of theatre tax relief, orchestra tax relief, and museums and galleries exhibitions tax relief (“MGETR) will be permanently set at 40 percent (for non-touring productions) and 45 percent for touring productions and all orchestra productions. The sunset clause for MGETR is also being removed meaning relief will not end on 31 March 2026 as announced at Spring Budget 2023. Tax relief for training costs HMRC has also published updated guidance around the tax deductibility of training costs for sole traders and the self-employed. This guidance aims to ensure that updating existing skills, maintaining pace with technological advancements, or changes in industry practices, are allowable costs when calculating taxable profits.

Further reductions in National Insurance Contributions (“NICs”) for employees and the self-employed and a reduction in the higher rate of Capital Gains Tax (“CGT”) for residential properties disposals featured under the personal taxes banner. Amendments will also be made to the high income child benefit charge thresholds ahead of more sweeping changes in 2026. The remittance basis regime for non-UK domiciled individuals is to be abolished and replaced from 6 April 2025 with a new residence based regime and a new residence based regime will also be introduced for Inheritance Tax. And finally, the furnished holiday letting regime is to be completely abolished from 6 April 2025. NICs reductions From 6 April 2024, the main rate of employee NICs is being reduced from 10 percent to 8 percent. Combined with the 2 percent reduction from 12 percent to 10 percent which was announced at Autumn Statement 2023 and took effect from 6 January 2024, according to the Budget publication this will save the average worker on £35,400 over £900 a year. From the same date, a 2 percent reduction is also being made in the main rate of Class 4 self-employed NICs which will now reduce from 9 percent to 6 percent from 6 April 2024 (a 1 percent reduction from 9 percent to 8 percent from 6 April 2024 had previously been announced at Autumn Statement 2023). When taken together with the abolition of the requirement to pay Class 2 NICs from 6 April 2024, this should save the average self-employed individual on £28,000 around £650 a year. CGT on residential property disposals From 6 April 2024, the higher rate of CGT for residential property gains will be reduced from 28 percent to 24 percent. Residential property gains in the basic rate band will continue to be taxed at 18 percent. High income child benefit charge (“HICBC”) In order to end the current unfairness in the Child Benefit system, the Chancellor announced that from April 2026 the HICBC will move to be assessed on the overall household, rather than on an individual basis. The Government will consult on this in due course. In the meantime, from April 2024 the HICBC income threshold where the tax commences will be increased from £50,000 to adjusted net income of £60,000, and the rate at which the HICBC is charged will be halved so that Child Benefit is not withdrawn in full until individuals earn £80,000 (up from £60,000). This essentially means that from 6 April 2024, every £100 of income over £60,000 will result in a 0.5 percent tax charge on the child benefit received. Abolition of remittance basis for non-UK domiciled individuals The remittance basis for non-UK domiciled individuals is to be abolished from 6 April 2025 and replaced with a UK wide residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-UK tax resident for the last 10 years. Transitional arrangements will be introduced for existing non-UK domiciled individuals claiming the remittance basis. This will operate broadly as follows: There will be an option to rebase the value of CGT assets to 5 April 2019; A temporary 50 percent exemption for the taxation of foreign income will be available in 2025/26 only; and A two-year temporary repatriation facility will be available to bring previously accrued foreign income and gains into the UK at a 12 percent tax rate of tax. Further information on these changes can be found in a technical note published by HMRC. Inheritance tax (“IHT”) The Government also announced its intention to move to a residence-based regime for IHT and will consult in due course on the best way to achieve this, including consulting on a 10-year exemption period for new arrivals and a 10-year ‘tail-provision’ for those who leave the UK and become non-resident. However, no changes to IHT will take effect before 6 April 2025. Savings The 0 percent starting rate band for savings income will remain at £5,000 in 2024/25.

Balancing the recent news that the UK tipped into recession at the end of 2023 with calls from politicians in his own party to reduce taxes in what is most likely an election year, Chancellor Jeremy Hunt delivered the UK’s Spring Budget 2024 last Wednesday. According to the Chancellor, the main announcements centred around “more investment, more jobs, and lower taxes”. Read the Institute’s reaction to the Budget. The VAT registration threshold will increase to £90,000 from April 2024 and full expensing which provides 100 percent capital allowances for investments in new plant and machinery by companies will be extended to leased assets, when affordable. The higher 28 percent rate of Capital Gains Tax on residential property disposals will be reduced to 24 percent from 6 April 2024. From April 2025 the remittance basis regime for non-UK domiciled individuals and the furnished holiday lets regime will both be abolished. However, the big ticket announcement was the 2 percent reduction in the rate of National Insurance Contributions for both employees and the self-employed, which will take effect from 6 April 2024. According to the Chancellor’s speech, the Northern Ireland Executive will receive an additional £100 million under the Barnett Consequential (which compensates devolved administrations with funding where Budget measures do not apply UK-wide). And, as announced as part of the package to restore the Northern Ireland Executive, the government will establish an Enhanced Investment Zone in Northern Ireland using £150 million in funding, which will “be able to be used flexibly across spending and tax levers”. Details on the Northern Ireland Enhanced Investment Zone will be published “soon”. The government also committed £2 million “to boost global investment and trade opportunities for Northern Ireland.” Members will also be interested to hear that HMRC’s long planned consultation on “Raising standards in the tax advice market” has been launched and essentially examines options to strengthen the tax agent regulatory framework, including requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. The Institute will be responding to this consultation and engaging with members on this important issue. The analysis in this and subsequent stories is based on the Spring Budget 2024 publications of HMRC and HM Treasury and specifically the main red book publication. The Spring Finance Bill 2024 is expected to be published later this week, in the meantime supporting documents are available, as is the Spring Budget 2024 overview of the tax legislation and rates. A further set of tax administration and maintenance announcements will also be made on “Tax Administration and Maintenance Day” on Thursday 18 April.

Revenue has updated the Tax and Duty Manual regarding games and sports bodies exemptions under  section 235 TCA 1997 to include:  the insertion, by Finance (No. 2) Act 2023, of a definition of sport which includes both competitive and recreational sport; and  a summary of the High Court case concerning the "sole purpose" test in section 235(1) TCA 1997. 

Revenue has updated the Tax and Duty Manual regarding Schedule E deductions for employed consultants and non-consultant hospital doctors (NCHDs). The updated manual provides information on claiming a flat rate expense deduction in 2024. 

Revenue has updated the Tax and Duty Manual which provides guidance on the taxation of domestic employees by domestic employers. The updated manual provides clarity on how domestic employees declare income from the domestic employer and includes updated bank account details. 

Revenue has updated the Tax and Duty Manual regarding the levy on certain financial institutions (the bank levy) provided under Section 126AA SDCA 1999. The manual has been updated to reflect that the levy provided under section 126AA has not been extended beyond 31 December 2023 as it has been replaced by a revised bank levy for the year 2024, provided for under section 126AB SDCA 1999. 

Revenue has recently published the following new VAT guidance:  VAT treatment of negotiation services in respect of financial services.   VAT treatment of construction services. The reverse charge construction Tax and Duty Manual marked as no longer relevant.  the VAT treatment of fixtures and fittings.  In addition, the VAT guidance on the Supply of Property has been updated to provide further clarity in relation to taxable supplies of property. 

Revenue has updated the Capital Acquisitions Tax Manual which provides guidance on the Statement of Affairs (Probate) Form SA.2 and the probate application process. Updated guidance regarding application for clearance under section 48(10) CATCA 2003 to distribute benefits to non-resident beneficiaries is provided for persons that are submitting their request through MyAccount.   In addition, guidance regarding the appointment of an Irish resident agent where beneficiaries are non-resident has been redrafted to align it with the applicable sections in the Capital Acquisitions Tax Consolidation Act 2003. 

Revenue has updated the Tax and Duty Manual regarding unapproved share options to reflect changes introduced in Finance (No.2) Act 2023. By virtue of section 128 TCA 1997, from 1 January 2024 the taxation of a gain realised on the exercise, assignment or release of share options no longer falls under individual self-assessment. Instead, employers are responsible for collecting income tax and USC from employees on share option gains and remitting those taxes to Revenue as part of the payroll process.   A consequential amendment was made to the Social Welfare Act with regard to the collection of PRSI by employers. 

Following representations at the recent meeting of the TALC Direct and Capital subgroup, Revenue has updated the Stamp Duty Manual for company reconstructions and amalgamations under section 80 SDCA 1999. The guidance has been updated to confirm that Revenue accepts that the transfer of a 100 percent shareholding of a company carrying on a business in its own right constitutes the transfer of an undertaking.   The manual has also been updated with the deletion of the following paragraph:  “In certain circumstances, the holding of an investment may constitute an undertaking, if there is active (as opposed to passive) ownership of the investment concerned. In this regard, Revenue will generally accept that a 100% shareholding may constitute an undertaking for the purposes of section 80.” 

Latest Exchequer figures show that tax revenues to the end of February were €12 billion, up 5.5 percent on the same period last year. Income tax receipts of €5.3 billion were recorded, a 5.7 percent annual increase, with VAT receipts up 4.8 percent compared to end-February 2023 figures. At €0.6 billion to end-February, corporation tax receipts were slightly down on last year.   An Exchequer deficit of €0.1 billion was recorded at the end of February (the deficit at the end of February 2023 was €2.5 billion, although this included the transfer of €4 billion to the National Reserve Fund). On a 12-month rolling basis, the Exchequer recorded a surplus of €1.5 billion. The underlying position for the period is a decrease of €1.5 billion with increased public expenditure offsetting growth in tax receipts.  Commenting on the latest figures, Minister for Finance, Michael McGrath said:  “Today’s figures largely represent the continuation of trends observed last month and towards the end of last year. The 7% increase in tax revenues in February compared to the same month last year is to be welcomed, and is further evidence in particular of the strength of the labour market. The 5.5% growth in tax revenues across the first two months of the year is broadly consistent with our forecast on Budget day. However, I would emphasise that it is too early at this stage in the year to draw any conclusions about the trajectory of tax receipts, particularly before the key corporation tax payment months. The coming months will provide a firmer indication of the pattern of tax receipts across the year. Overall, our economy has proven to be remarkably resilient against the backdrop of significant external uncertainty. In a more shock-prone world, it is essential that we maintain our public finances on a sustainable footing: this is the best way to ensure that we are in the strongest possible position to respond to external challenges. Work on drafting the legislation to provide for the Future Ireland Fund and the Infrastructure, Climate and Nature Fund is now at an advanced stage, and I look forward to bringing it to government shortly.”