Other news in brief
A round up of other news this week.
A round up of other news this week.
On 3 November 2022, the Bank of England Monetary Policy Committee voted to increase the Bank of England base rate to 3 percent from 2.25 percent. As a result, HMRC interest rates for late and early payments will increase. HMRC’s late payment interest rate for most taxes is set at the Bank of England base rate plus 2.5 percent so their late payment interest rate will increase from 4.75 percent to 5.5 percent. Interest charged on underpaid quarterly corporation tax instalment payments is calculated as base rate plus 1 percent so this will increase to 4 percent. These changes will come into effect on 14 November 2022 for quarterly instalment payments and 22 November 2022 for non-quarterly instalment payments. HMRC will also increase their repayment interest rate for most taxes from 22 November 2022 to 2 percent, as it is set at Bank Rate minus one percent, with a 0.5 percent lower limit. For interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments the rate will be 2.75 percent from 14 November 2022.
The UK hybrid mismatches rules include an exemption for certain hybrid instruments issued by banks, also known as the ‘regulatory capital exemption’. The OECD recommendations on which the UK rules are based give individual jurisdictions the option of exempting regulatory capital in this way, reflecting the fact that hybrid features are often included in these instruments, simply to satisfy regulatory requirements. The UK exemption was due to be removed from 31 December 2022 because of a sunset clause that was required by an EU directive, but which the UK is no longer required to comply with post-Brexit. Following a period of consultation from May-June 2022, final regulations have now been laid before the House of Commons to ensure that the exemption remains in place and continues to apply from 1 January 2023. Although potentially helpful to some banking groups, when originally proposed, the Government forecast that the measure would have no Exchequer impact, suggesting that the practical consequences of extending the implications may in reality be fairly limited.
A new Private Members’ Bill has been introduced to reform and encourage employee share ownership. The Bill makes provision for a new employee share ownership scheme with preferential access for lower paid workers. This is intended to be more accessible to workers in the gig economy and others with less regular working patterns, and would allow tax-advantaged free share awards to be made subject to only a one year holding period. The Bill also reduces the holding period for shares acquired through a tax-advantaged ‘all-employee’ Share Incentive Plan from five to three years, and requires companies to disclose in their annual reports the type of employee share ownership plans they operate and the level of take up. The Treasury would also be required to consult with key stakeholders on how employee share ownership could be modernised to reflect changing working patterns, since the current tax-advantaged employee share plans were introduced. The Bill’s second reading will be on 3 February 2023. As a Private Members’ Bill, it is perhaps unlikely to become law unless it attracts Government support. However, as the Bill has a broad cross-party sponsorship, enactment is a possibility.
The Public Accounts Committee has announced that it is opening an inquiry into UK Digital Services Tax (DST). The Committee will question senior officials at HMRC and HM Treasury on the design, implementation and administration of UK DST and readiness to replace it with the OECD reforms. The Committee is interested in receiving evidence on these issues as well as on the findings of the National Audit Office report on DST (although, at the time of writing, the report had not yet been published). Evidence should be submitted by 18:00 on 27 November 2022.