Tax Day 2021: changes to business rates, Income Tax, IHT and more
Yesterday marked exactly a year since the county first entered lockdown. What was less well publicised was that fact that 23rd March was also ‘Tax Day 2021’. If you’ve not heard of ‘Tax Day’ before, it’s the day that the government publishes proposed changes to tax policy. This year, the Treasury published a small library of tax policy documents and announcements. These included the opening of 12 new consultations, the responses to seven more, plus four research papers.
While none of the Tax Day announcements will have an immediate impact on your business or finances, they give you a flavour of how the government wants to change the tax system. We’ve summarised some of the key information in this post, but you can find a full summary here.
What are the Tax Day 2021 proposals?
The Tax Day 2021 announcements fall into two main categories: ‘Modernising tax administration’ and ‘Tackling non-compliance’. A third category ‘Further tax policy announcements’ contains a melange of policies ranging from a business rates review to a residential property developer tax designed to help pay for the costs of cladding remediation.
Below are some of the key announcements in each category. However, given the sheer number of proposals, we strongly recommend you read the government document for full and further details.
Modernising tax administration
- Making Tax Digital (MTD). We already knew the government planned to legislate to extend MTD to Income Tax Self Assessment from April 2023. However, it has now published research that demonstrates the benefits of doing this.
- Timely Payment. Essentially, the government is proposing that we pay Income Tax and Corporation Tax more frequently. In other words, it wants to get hold of our money closer to the time we’ve earned taxable income. The Treasury says: “The government is publishing a call for evidence to begin to explore the opportunities and challenges of more frequent payment of income tax within Income Tax Self Assessment, and of corporation tax for small companies, based on in-year information.”
- Simpler Inheritance Tax reporting. From 1st January 2022, over 90% of non-taxpaying estates won’t have to complete IHT forms for deaths when probate or confirmation is needed. This, and related measures, follow recommendations from the Office of Tax Simplification.
- Tackling disguised remuneration. The government has published responses to a call for evidence concerning ‘disguised remuneration’ tax avoidance – e.g. schemes that avoid tax by paying people sums that appear to be non-taxable (such as ‘loans’ in place of salary).
- Tackling offshore / international tax avoidance. A ‘No Safe Havens’ strategy outlines measures to make sure taxpayers comply with UK tax obligations, no matter where their income or gains are made.
Further tax policy announcements
- A fundamental review of business rates. The government has published an interim report into this review, which covers business rates levels, revaluations, administration and billing.
- Aviation tax consultation. There is a new consultation on Aviation Tax. The Treasury is proposing to reduce the tax on internal UK flights to support regional connectivity.
- Changes to self-catering accommodation criteria for business rates. The government wants to stop property owners from reducing their tax liability by declaring a property is for rent, while making little effort to rent it out. Legislation will change the criteria for determining whether a holiday let is valued for business rates by asking owners to account for actual days it was rented.
- Residential property developer tax. There is a new consultation on this tax, which the Treasury plans to introduce in 2022. It wants to use the income to help pay for the costs of dangerous cladding remediation.
As advised earlier, it’s a good idea to take a look at the government’s own summary of policy announcements. It includes many other announcements, from technical updates to pensions tax to simplification of the land and property VAT rules. It’s quite possible one or more of the 12 new consultations affects you, so it’s worthwhile checking.
Tax Day 2021 – what next?
If you have any queries about the Tax Day 2021 announcements or want to know how they could affect your business, we can help. If you are a THP client, simply get in touch with your account manager.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration