Government ‘Tax Day’ 23 March 2021 sees over 30 documents, consultations and updates published
Tax Day, as it was referred to saw the government publish more than 30 documents, consultations and policy updates which traditionally would have been published at Budget 2021. These form part of the ‘Tax policies and consultations update (Spring 2021)’, which, the Government believes provides more space for stakeholders to scrutinise the information.
The Government has stated that the publication of this series of tax documents and consultations is a move to strengthen policymaking and help create a more trusted, simple and modern tax system. None of the announcements will have any impact on the Government’s finances, nor will they require legislation in the current Finance Bill.
Tax Day: ten-year plan announcements
Much of the announcements made on Tax Day 2021 are part of the Government’s wider ten-year plan to modernise the tax system.
Published in July 2020, the plan sets out the Government’s strategy to improve the resilience and effectiveness of the country’s tax administration system over the next ten years.
Alongside consultations that have been published and are due for publication, the Government is seeking views via a call for evidence on how the tax system could be modernised to help make it easier to deal with and more straightforward for taxpayers.
Tax Day publications
The announcements/documents as part of Tax Day include the following:
- Modernising tax administration – including the continual roll out of Making Tax Digital (MTD), investment in digital infrastructure and the frequency that tax is paid to HMRC
- Simplifying Inheritance Tax reporting
- A crackdown on second homes that are classed as holiday lettings
- Residential Property Developer Tax – a consultation on a new tax on the largest residential property developers, to be introduced in 2022
- Tacking non-compliance – this will include work on clamping down on promotors of tax avoidance, tackling disguised remuneration tax avoidance and off-payroll working rules (IR35)
- Business rates review interim report and tax administration call for evidence
- Air passenger duty consultation (which will consider introducing a reduced domestic rate and consider the case for increasing the number of bands for international travel.
- Several announcements that form part of the Government’s ten-year plan to build a ‘trusted, modern tax system’
Following recommendations from the Office of Tax Simplification, the Government is to simplify reporting regulations for Inheritance Tax. This will mean that from 1 January 2022 over 90% of non-taxpaying estates will no longer have to complete inheritance tax forms for deaths where probate or confirmation is required.
Alongside this, the temporary provision which currently exists requiring those dealing with a trust or estate to provide an inheritance tax return, without obtaining physical signatures from all those involved, will be made a permanent arrangement.
Tax on holiday lettings
A tightening on the restrictions surrounding holiday lettings has been announced. Landlords will now be required to prove that a genuine and realistic effort has been made by them to rent out their property for at least 140 days per year.
HMRC has a concern that many homes are incorrectly claiming to be holiday lets, that are in fact second homes, to avoid paying council tax.
The number of second homes registered as holiday lets has gone up by 27% to around 60,000 over the last three years.
When a property is classed as a holiday let it is exempt from Council Tax, with the property being liable for business rates instead. However, business rates are only paid if the rateable value is more than £12,000. With most holiday lets having a rateable value of less than £12,000, HMRC estimates that less than 5% pay business rates. Further details are due to be published in the forthcoming weeks.
A full list of the announcements can be found on gov.uk here.
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