A range of VAT measures featured from VAT relief to energy saving materials, to the treatment of private hire vehicles.  Reforms to Energy-Saving Materials   Following a call for evidence, the Government intends to expand the VAT relief available on the installation of energy-saving materials by extending the relief to additional technologies, such as water-source heat pumps, and bringing buildings used solely for a relevant charitable purpose within scope.   As a result of the Windsor Framework, these reforms will be implemented UK-wide in February 2024. Full details on these reforms will be published shortly.  Private hire vehicles   The Government will consult in early 2024 on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC.   This case considered the regulation of Uber's business model outside of London, and specifically whether the private hire vehicle operator is acting as a principal when entering into a contractual obligation with the passenger to provide the journey. This potentially has VAT consequences in terms of whether the private hire vehicle operator is acting as a principal or an agent for the purposes of charging VAT.  VAT retail export scheme   The Government continues to review the rules of this scheme and thanks industry for submissions on the scheme and the associated airside scheme (tax-free shopping). The Government will continue to accept representations and will consider any new information carefully alongside broader data.   Sanitary products   The scope of the current VAT zero rate relief on women’s sanitary products is being extended to include reusable sanitary underwear from 1 January 2024. 

The main Autumn Statement 2023 publication contained details throughout of a range of measures and changes which did not specifically feature in the Chancellor’s main speech. We summarise these below. The Government will tackle the long-standing problem of “small pot” pensions and intends to launch a call for evidence on a lifetime provider model which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension. This call for evidence will also examine a potential expanded role for collective defined contribution schemes in future. The Government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000;  As confirmed by HM Treasury in October, the Government will legislate to extend the Enterprise Investment Scheme and Venture Capital Trusts to 2035 hence they will not end as originally intended on 5 April 2025;  The Government is currently reviewing responses to the consultation on taxation of environmental land management and ecosystem service markets and will respond in due course;  The Growth Market Exemption, which provides relief from Stamp Duty and Stamp Duty Reserve Tax, is being extended to include smaller, innovative growth markets. This extension will also increase the threshold for the market capitalisation condition that is used within the exemption from £170 million to £450 million. These changes are included in the Autumn Finance Bill 2023 for implementation from 1 January 2024;   The offshore receipts in respect of intangible property (“ORIP”) rules are being abolished in respect of income arising from 31 December 2024. This repeal will be legislated for in a future Finance Bill, and will take place alongside the introduction of the Pillar Two Undertaxed Profits Rule, which aims to more comprehensively discourage the multinational tax-planning arrangements that ORIP sought to counter;   Exempting legislation is included in the Autumn Finance Bill 2023 to exempt from corporation tax compensation payments made under the Historical Shortfall Scheme, Group Litigation Order schemes, Suspension Remuneration Review or Post Office Process Review Scheme. This draft legislation aligns the taxation of onward payments of compensation to that of individual recipients;  Further to the publication of draft legislation on 18 July 2023, the Government is making amendments to the rules for Real Estate Investment Trusts which aim to enhance the competitiveness of the regime. The changes will take effect from the date of Royal Assent of the Autumn Finance Bill 2023, and will apply to accounting periods ending on or after 1 April 2023, or, where relevant, will be deemed to have always had effect;  The annual chargeable amounts under the Annual Tax on Enveloped Dwellings regime will be increased in 2024/25 in accordance with September 2023’s CPI figure of 6.7 percent. The Government will implement this change in the usual way through a Treasury Order;  There will be no changes to the van benefit charge and the car and van fuel benefit charges in 2024/25 hence these will remain at their 2023/24 levels;   Vehicle excise duty (“VED”) rates for cars, vans and motorcycles will increase from 1 April 2024 in line with inflation. To support the haulage sector, the VED rates for HGVs and the HGV levy will both remain unchanged from their 2023/24 rates in 2024/25;  Alcohol duties were frozen until 1 August 2024 with the annual increase decision also delayed to the Spring Budget 2024 in order to give businesses time to adapt to the new duty system introduced on 1 August 2023;  Duty rates on all tobacco products increased by RPI plus 2 percent from 6pm on 22 November 2023 and are included in the Autumn Finance Bill 2023. To reduce the gap with cigarette duty, the rate on hand-rolling tobacco increased by RPI plus 12 percent;   The Gross Gaming Yield bandings for gaming duty are frozen from 1 April 2024 until 31 March 2025;   The Government will consult shortly on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV, and radio) into a single tax, rather than taxing it through a three-tax structure;   The Government will legislate so that, where the substantive decision to proceed with a project to create a new electricity generation station or expand an existing generating station is made on or after 22 November 2023, receipts from that new generating station or additional capacity will not be subject to the Electricity Generator Levy;  The Government is legislating in the Autumn Finance Bill 2023 to increase the Plastic Packaging Tax rate in line with CPI, from 1 April 2024, to £217.85 per tonne. To ensure the Plastic Packaging Tax continues to incentivise the use of recycled plastic in packaging, an evaluation plan will also be published by the end of the year in order to gather further evidence to inform the future trajectory of the rate and recycled plastic content threshold;   The Government will increase the Aggregates Levy rate in line with RPI, from 1 April 2025 to £2.08 per tonne; and  A technical change is being made to section 660 of the Income Tax (Earnings and Pensions) Act 2003 in the Autumn Finance Bill 2023, to ensure that the legislative reference to the Scottish Government’s Carer Allowance Supplement is correct. 

This week we bring you news about the need to include an agent reference number on P87 forms (employment expenses claims) and marriage allowance claim forms from 26 February 2024 and the VAT DIY housebuilder’s scheme is going digital from tomorrow, Tuesday 5 December. The UK and other jurisdictions recently announced their intention to implement the OECD’s Crypto-Asset Reporting Framework. HMRC is seeking feedback on its Annual Report publication and the latest advisory fuel rates which apply from 1 December are also available. And finally, the latest news and information bulletin from HMRC is available.  Change to P87 and marriage allowance forms from February 2024   Agent Update 114 recently confirmed that from 26‌‌‌ ‌‌February 2024, paid tax agents submitting form P87 (claims for relief from employment expenses) and marriage allowance claims on behalf of clients will be required to provide the agent reference number when submitting the forms if the agent wishes to receive the related repayment.   If the agent reference number is not provided, the related repayment will be paid to the taxpayer and not the agent, even if the repayment has previously been nominated to be paid to them. This change is part of HMRC’s continuing drive to protect taxpayers from the behaviours of certain repayment agents.  VAT DIY housebuilder’s scheme to go digital  As announced in the 2023 Spring Budget, the Government is legislating to digitise the VAT DIY housebuilders’ scheme from tomorrow, Tuesday 5 December. However, we understand that paper based claims will also remain possible if the digital process cannot be used. The time limit for making claims is also to be extended from three to six months after completion of the build.   By way of reminder, this scheme allows DIY housebuilders to reclaim VAT incurred and paid by them on building materials for any part of a house build which they undertake themselves and is also available to individuals converting a non-residential building into their own home.   The legislation to make these changes was laid recently. The associated Statutory Instrument  and tax information and impact note are as follows:-   The Value Added Tax (Refunds to “Do-It-Yourself” Builders) (Amendment of Method and Time for Making Claims) Regulations 2023; and  VAT: Digitisation of claims and extending time limit for DIY Housebuilders Scheme.   HMRC will be publishing new guidance when the changes go live tomorrow.  HMRC Annual Report  HMRC publishes its Annual Report and Accounts each year in July and want to make sure it's as helpful as possible to those who read it.  They would like feedback on how you use the Annual Report. Does it contain the information you need? Is it well presented and easy to read and find what you're looking for? How could it be improved? By taking a few minutes to complete this short form and give HMRC some feedback on their Annual Report and Accounts, you can help HMRC to make its performance reporting more accessible and effective. 

In this week’s EU exit corner, we bring you the latest guidance updates and publications relevant to EU exit. The most recent Trader Support Service and Cabinet Office Borders bulletins are also available. HMRC has also issued an email about the first phase of its Border Targeted Operating Model which takes effect in just under ten weeks, and will impact on movements of goods from Ireland to Great Britain. The email contains important details of actions which need to be taken and how to prepare for these changes. Miscellaneous guidance, publications etc.   The following updated guidance, and publications relevant to EU exit are available:-  Customs, VAT and excise UK transition legislation from 1 January 2021;  Reference documents for The Customs (Reliefs from a Liability to Import Duty and Miscellaneous Amendments) (EU Exit) Regulations 2020;  Reference Document for The Customs (Origin of Chargeable Goods) (EU Exit) Regulations 2020;  Reference document for authorised use: eligible goods and authorised uses;  Trade Specialised Committee on Goods;  Joint statement from the Specialised Committee on Financial Provisions, 26 October 2023; and  EM on Windsor Framework customs arrangements. 

HMRC’s 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. HMRC is also holding webinars which aim to explain its compliance professional standards. A webinar is also being held tomorrow (Tuesday 5 December) on the National Minimum Wage in the care sector.  Compliance and professional standards  HMRC is holding webinars which aim to explain its compliance professional standards. The webinars are scheduled for the following dates and times and will be recorded and available to view thereafter:-  8 December 2023 - 13:45; and  15 December 2023 - 15:45.  National minimum wage   HMRC’s National Minimum Wage team are holding a live webinar to talk through common issues found in the care sector, and how employers can protect their workers’ rights. There will also be a panel of experts on hand to answer questions on the topic - register here. 

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime.  

Check out the latest items on the Agent Forum. Remember, in order to view each item, you must be signed up and logged in.  All agents, who are a member of a professional body, are invited to join HMRC’s Agent Forum. This dedicated Agent Forum is hosted in a private area within the HMRC’s Online Taxpayer Forum. You can interact with other agents and HMRC experts to discuss topical issues and processes. 

In a new report, the European Commission analyses the solidarity contribution applied on the unexpected surplus profits for the fossil fuel industry which arose during the 2022 energy crisis. The report sheds light on market developments in the fossil fuels sector covered by this emergency intervention since the measure was adopted in autumn 2022.

The  OECD is running a public consultation to develop an alternative definition of permanent establishment for activities in connection with the exploration and exploitation of extractible natural resources. The changes put forward in this discussion draft are expected to be included in the next update to the OECD Model and its Commentary. The consultation closes on 4 January 2024.

Like previous global climate summits, days 1 and 2 of this COP saw global leaders, including Taoiseach Leo Varadkar, delivering speeches to the summit. As Environment and Science Editor Kevin O’Sullivan , writes in the COP28 special edition of the Irish Times Sunday ‘The game of “down or out” will surface repeatedly [at this year’s climate summit]. Should the world “phase out” what’s known as “unabated” oil and gas — that’s when fossil fuels are burned without technologies to capture their greenhouse gases — or should they just be “phased down”?’ Saturday Coinciding with Leaders Days was the newly launched two-day long Business & Philanthropy Climate Forum (BPCF). This multi-stakeholder-engagement platform is the first dedicated platform for the private sector and philanthropy to be included in the COP process. It convened over 1,300 global business leaders and philanthropists, and saw discussions on topics including carbon pricing, renewables, green economy programmes, commitments on nature, the role of media in climate change and AI’s impact on climate change. At the BPCF, three organizations – Green Climate Fund, Allied Climate Partners, and Allianz Global Investors – came together to mobilise $5 billion in collective philanthropic, public and private funding to unlock long-term capital of $20 billion to advance climate and nature action. Initiatives announced included  the new Climate Solutions investment platform, announced by Rishi Kapoor, co-CEO of Investcorp, which targets circa $750 million of growth capital investments to help scale companies that provide products, services and technologies to support decarbonization and address the impacts of climate change globally. Separately a pact, sponsored by COP28 President Sultan Al Jaber, was signed up to by 50 oil and gas companies. The Oil and Gas Decarbonization Charter commits signatories to cutting greenhouse gas emissions from their operations and slashing methane releases to near-zero by the end of the decade. The charter is reportedly one of COP28’s benchmark achievements for Al Jaber, himself the head of one of the world’s largest oil producers (ADNOC). Signatories to the charter represent nearly 40 percent of global oil production, and for 31 of those companies it was their first time making such a commitment to reach net-zero methane. Of the 50 companies that signed up, 60 percent of them were National Oil Companies, the largest-ever number to commit to a decarbonization initiative. The Charter was launched alongside another key initiative, the Global Decarbonization Accelerator (GDA). This initiative is focused on three key pillars: rapidly scaling the energy system of tomorrow decarbonizing the energy system of today and targeting methane and other non-CO2 greenhouse gases. The Charter has attracted criticism, including from UN Secretary-General António Guterres, however, because none of the companies have agreed to reduce oil and gas production, and that the Charter “says nothing about eliminating emissions from fossil fuel consumption”. Also, while signatories will have to submit a plan to meet the targets by 2025, the targets themselves are not binding. Defending the pact, Al Jaber argued that oil and gas will remain part of the energy system for decades to come even as fossil fuels are phased out, and they must be made clean as possible. In a widely supported initiatives, over 110 governments also pledged to triple the world's renewable energy capacity by 2030, as a route to cut the share of fossil fuels in the world's energy production. Also announced on Saturday was a collaboration by the International Energy Agency, Environmental Defense Fund, the UN Environment Programme, the International Methane Emission Observatory and RMI, with support from Bloomberg Philanthropies. Data from the program — including surveillance by the MethaneSAT satellite set to launch next year — is meant to supply governments, and the public and others with information about emissions that can be used to hold companies accountable. Sunday – Health Day Health has become a major focus of the climate summit: extreme weather has been linked to the spread of disease – including spikes in infectious diseases, like cholera and malaria, due to floods caused by climate change – but also cardiovascular-related deaths due to unusually high temperatures (reportedly expected to nearly triple in the US by mid-century as climate change raises the frequency of very hot days), pollution and even fears about ancient outbreaks coming back to life from thawing Siberian permafrost (which also poses risks of release billions of tonnes of the extremely potent greenhouse gas methane into the atmosphere). Sunday was Health Day at COP28 with 123 countries backing the ‘COP28 UAE Declaration on Climate and Health’. This declaration aims “to place health at the heart of climate action and accelerate the development of climate-resilient, sustainable and equitable health systems”. Included in set of finance commitments on climate and health were commitments of $300 million commitment by the Global Fund to prepare health systems, and £54 million from the UK government. New initiatives were also announced to meet climate and biodiversity goals. $1.7 billion in nature conservation finance was unveiled, alongside a pledge by host country, the UAE, to contribute $100 of new finance for nature-climate projects. Other national and regional investment plans and partnerships were announced, focusing on nature-climate action to deliver on the Paris Agreement and the recently adopted Kunming-Montreal Global Biodiversity Framework. These included: $250 million new funding under the Ocean Resilience Climate Alliance (ORCA); three forest finance packages, and the Nature Finance Hub, a new initiative committing to mobilize $1 billion from development partners, with the intention of mobilizing a further $2 billion in additional private finance capital by 2030 into nature-focused climate projects. Addressing nature-loss can reportedly save $104 billion in adaptation costs and has the potential to provide upwards of 30 percent of the CO2 mitigation (i.e. reduction) action needed by 2030. As approximately 50 percent of global GDP is directly or indirectly dependent on nature and other ecosystem services, the conservation and restoration of natural ecosystems supports economic prosperity, with the potential to create nearly 395 billion more jobs and to protect 1 billion people whose livelihoods are directly dependent on nature.  Articles Hopeful signs emerging in the serious business of climate talks (Irish Times) UAE COP28 guest list led by bankers, lobbyists — and housekeeping (Financial Times)  

Climate finance was expected to be a major agenda item for this COP, so it comes as no surprise to find it dominating coverage of this summit so far. Often described as the ‘master key’ needed to unlock climate action, climate finance is a central focus area of the COP presidency’s plan of action to deliver on the pillars of the Paris Agreement. These four focus areas are: fast-tracking the energy transition fixing climate finance putting nature, people, lives and livelihoods at the heart of climate action underpinning everything with full inclusivity. In his opening speech UN Climate Change Executive Secretary Simon Stiell laid out a vision for the next two years and what is expected of countries, i.e. “every single commitment – on finance, adaptation, and mitigation – has to be in line with a 1.5 degree world”. UK’s King Charles III used his opening speech  to appeal to countries to unlock more capital for the energy transition and UN Chief Antonio Gutérres warned that "Earth’s vital signs are failing", before urging a faster transition to renewable energy. A new Loss and Damage Fund was established on the first day of COP (30 November) which will aim to keep up with the rising costs caused by extreme weather and slow-onset disasters such as sea level rise, ocean acidification and melting glaciers. The cost of loss and damage is estimated to be over $400bn annually. The initial funding for the Loss and Damage fund is close to US$429m, with $245m coming from the EU, including $100m pledged by Germany, which was matched by a pledge of $100 million from the UAE and $75 million from the UK. UAE President Mohammed bin Zayed Al Nahyan subsequently announced a $30bn fund for "global climate solutions" to be put into a climate finance vehicle called Alterra. The US has pledged $17.5 million, and Japan $10 million. Agriculture and food also dominated discussions. COP28 President Sultan Al Jaber announced a new major declaration on the future of food which some 134 countries have signed up to, including major food producers and consumers. The first of three high-level events focusing on the global stocktake also got underway today, focusing first on adaptation. Delegates are expected to discuss how the stocktake’s outcome can bolster efforts for countries and communities to better adapt to the impacts of climate change.

Munro O’Dwyer outlines the potential changes to the state pension from 1 January 2024, including emerging details concerning auto-enrolment and media coverage of the Standard Fund Threshold There are several changes coming down the pike regarding pensions, and it’s important employers know the impending changes and prepare for them. The Social Welfare (Amendment) Bill 2023 From 1 January 2024, changes are expected to the contributory state pension to facilitate greater flexibility, improved access and modifications to how it is calculated. The Social Welfare (Amendment) Bill 2023 is currently in pre-legislative scrutiny. Here are the provisions contained within it.   Increased flexibility There will be an ability to take the state pension at any age between 66 and 70, with an actuarially increased rate to reflect the later payment commencement date. There will also be an ability to make additional PRSI contributions after age 66 to increase the level of the state pension. However, an overall cap of 40 years of PRSI contributions will remain. This greater flexibility is in recognition of workforce, retirement and longevity trends. People are living longer, and there is increased demand to work longer and take phased retirement. The recent Budget announced a 0.1 percent per annum increase in PRSI from October 2024, which is part of steps to manage the long-term sustainability challenges associated with state pension provision. Change in state pension calculation There is currently a ‘yearly average method’ approach to calculating the level of state pension, which is inherently complex. From January 2025, there will be a ten-year phase-in of a ‘total contributions approach’ (TCA), with a target implementation date of 2034. This will recognise contributions (earned or credited) and home caring periods, up to 40 years, to be entitled to the full state pension. Between 2025 and 2034, a hybrid of both approaches will be used. The TCA aims to bring greater fairness to who receives a state pension and at what level, where contributions can be both earned and credited. Long-term carers Those who have spent more than 20 years providing full-time care for an incapacitated person may be entitled to an enhanced state pension from 2024. Credits will be given for periods greater than 20 years where there is a gap in the level of contributions due to caring. Individuals can request a contribution statement from the Department of Social Welfare through a MyGovID account to help ascertain contributions made and any shortfall in those contributions. For employers, these changes may mean further employee demand for both later and phased retirements. Rather than treat each case on its merit, having a suitable retirement framework for employees (covering early, normal and late retirement and the benefits provided) will clarify your retirement policies and procedures. It will also support future workforce planning. Auto-enrolment: the devil is in the detail Auto-enrolment (AE) legislation is expected in the coming weeks, with an anticipated introduction in late 2024. Stakeholders in the pensions industry have been liaising with the Department of Social Protection to understand the practical aspects employers must be aware of. Waiting period There is no waiting period in the AE system. The Central Processing Agency (CPA) intends to apply a 13-week rolling period for assessing eligibility without any backdating of contributions. Careful consideration of eligibility conditions in existing pension arrangements and the implications in the context of the AE system will be needed. Eligibility and exemption For existing schemes where employee contributions are non-mandatory but the employer contributes, they will be exempt from AE. There will be no other qualifying conditions at the outset of AE – these will only come into force in future years. The CPA drives participation in the AE system for employees. Employers cannot influence this; only employees can opt out once in the AE system. For this reason, assessing who will be eligible for AE (both existing employees and future hires) will be essential. There can be no dual participation in an occupational scheme and AE. It will only relate to employment where there is no pension provision. Should employers wish to move employees into their occupational scheme later, this will need to be triggered by the employee. Automation The intention will be for automated electronic payment notifications (AEPNs), similar to Revenue payroll notifications (RPNs), to be issued with effective dates from which payroll must apply. Payroll procedures will need to be updated to reflect this. The Standard Fund Threshold and its implications The impact of the Standard Fund Threshold’s €2 million cap on retirement savings has gained publicity recently. It causes a barrier for senior gardaí promotions where they would face a significant tax bill for excess pension savings above the €2 million limit. This €2 million limit has been in place since January 2014 and has not been indexed. As a result, more employees are currently, or are at risk of, breaching this limit and facing a significant tax bill. In the context of AE, it is unlikely that employers will have the freedom to exclude members who may have ceased contributions due to reaching the Standard Fund Threshold. It is good practice for employers to monitor those at risk of breaching the limit and identify a suitable strategy for dealing with impacted employees (more so in the context of AE). Defined benefit pension scheme settlements A recent move by central banks to pause the continued increase in interest rates has led to a change in the market expectation of future interest rate movements. For employers sponsoring defined benefit pension schemes, this may present a window of opportunity to consider the full or partial settlement of its defined benefit pension scheme liabilities in the near-term. Given the economic backdrop, many sponsoring employers are now exploring the feasibility of partial/full buyouts. Insurers are also in the market, offering strong commercial terms to take on the liabilities. It would be sensible for employers to at least consider their long-term objective and potential readiness for settlement in 2024. Munro O’Dwyer is Partner at PwC