How Tax Day might affect you – latest government updates and consultations

Tax Day is the day the government publishes proposed changes to tax policy, including proposed consultations, updates and other information. This year, Tax Day took place on 23rd March – exactly one year since the country first entered lockdown.

While the announcements are a process of consultations, reviews and updates and, therefore, have no immediate impact, it is worthwhile understanding how tax changes in the future might affect your business. Here, we take a look at the latest proposals and what they might mean for you.

Modernising the tax payment system

Making Tax Digital – in addition to extending Making Tax Digital to Income Tax Self-Assessment from April 2023, the government has also published research on the benefits of the new digital system.

How Tax Day might affect you – latest government updates and consultations

Paying Income Tax and Corporation Tax – the government is proposing more frequent payments for Income Tax and Corporation Tax and will be investigating opportunities and challenges surrounding this proposal. However, in future, it could mean payments are made quarterly rather than annually.

Inheritance Tax reporting – the government will be simplifying the process for Inheritance Tax making it more intuitive and easier to operate. From 1 January 2022, more than 90% of non-taxpaying estates will no longer have to complete IHT forms for deaths when probate or confirmation is needed.

Dealing with tax avoidance and non-compliance

There will be a range of consultations and summaries of responses to tackling tax avoidance and non-compliance. These include a call for evidence regarding 'disguised remuneration'. For example, schemes that avoid tax such as loans in place of salaries or other non-taxable distribution, which disguises the payment of income.

Offshore and international tax avoidance will also be under the microscope to ensure taxpayers comply with UK tax obligations, regardless of where their income or profits are made.

Other potential changes to tax policies

Business rates – the government has published an interim report for its fundamental review of business rates, including business rate levels, revaluations, administration and billing. The review will conclude in the autumn. The government is also looking at how to stop property owners from reducing their tax liability by declaring a property is for rent, while making little effort to find a tenant. New legislation proposals will determine whether a holiday let is valued for business rates by requiring owners to account for actual days the property was rented out.

Aviation tax – there will be a consultation on aviation tax reform, including The Treasury's proposals to reduce tax on internal UK flights to support regional travel connections.

Residential property developer tax – a consultation will be launched for implementing a new tax on the largest residential property developers with the aim of using the income to help pay for the costs of dangerous cladding remediation. The Treasury plans to introduce this tax in 2022.

Taxation of Trusts – a summary of responses has been issued regarding the government's consultation on the taxation of trusts. While the responses do not indicate the need for a fundamental reform at this stage, the issues will be kept under review.

Land and Property VAT rules – a call for evidence will be published on VAT land and property exemptions to explore options for making the exemptions simpler and clearer.

If you need further information or advice about what the Tax Day proposals might mean for you, we are here to help.  Please give us a call on 01892 559480, or get in touch via our online enquiry form.

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