TAX DAY. MUCH ADO ABOUT NOT A LOT. YET.
After much speculation and three weeks on from Rishi Sunak’s Spring Budget, a series of papers were published in a low-key manner by the Government on 23 March 2021 – dubbed “Tax Day” by the press (and tax pundits alike).
Despite more than 30 tax updates being published, the headline announcements haven’t lived up to the hype that preceded them.
We’ve summarised some of what the releases did and, more significantly did not say, below. And if you want to read the detail, you can do so here, although consider yourself warned!
CAPITAL GAINS TAX
It’s been reported for some time that the Government was looking to increase CGT rates, perhaps even aligning them to income tax rates. Well not yet – the Budget offered no announcements on this, and neither did this Tax Day – the consultations were deafeningly silent on CGT.
Perhaps the rumours were wrong, or maybe we’ll hear more on this down the line. For now, this is good news for business owners and investors alike, who plan to make capital disposals.
TAX ADMIN & PAYMENTS
The Government wants to update and improve the tax system, making tax more straightforward to pay and harder to get wrong. Two separate calls for evidence have been published, requesting views by 13 July 2021, on:
1. The tax administration framework – the core legislation, processes and guidance which underpin obligations for HMRC, taxpayers, agents and third parties. Views are being sought on how the framework could be reformed as part of the Government’s commitment to creating a trusted, modern tax administration system.
2. Timely tax payments – views are requested on the idea of more frequent payment of self-assessment income tax and corporation tax (for small companies). They could look to align tax payment dates closer to when profit is made, based on in-year information.
A promise has been made to reduce the paperwork and red tape for those dealing with inheritance tax. From 1 January 2022, over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms. In the same fashion, a current temporary provision for inheritance tax returns to be provided without physical signatures from all those involved, will be made permanent.
Back in 2018, the Government carried out a consultation around trust tax. The responses to this have now been published. In a nutshell, there is no desire for a comprehensive reform of trust tax at this stage.
Again a reform to the level of tax relief on pension contributions wasn’t mentioned. It appears, at least for now, the Government’s main tactic is to restrict tax relief by keeping the annual allowance and lifetime allowance at fixed levels, as more fiscal drag – a similar tactic they applied to income tax allowances and tax rate bands.
A QUESTION OF ‘WAIT AND SEE’
To sum up, there was not a great deal of substance revealed on the first Tax Day. What there was, however, was a series of signs of intent. No doubt, post-consultation, we’ll all be a little bit the wiser.
As ever, if you’d like to discuss any issues highlighted in these announcements, please contact your usual CPW team member or book a chat with us by clicking here.