Other news in brief

Autumn Finance Bill receives Royal Assent and becomes Finance Act 2023

Autumn Finance Bill 2022 received Royal Assent on 10 January 2023, at which point it became Finance Act 2023. The key pieces of tax legislation included in Finance Act 2023, as detailed in our previous Autumn Statement article, include changes to the Energy Profits Levy and rates of research and development tax reliefs as well as measures impacting individuals, such as the freezing of the income tax personal allowance and basic rate limit. A further Finance Bill, Spring Finance Bill 2023, will be published after the Spring Budget, which is due to take place on 15 March 2023.

BEPS 2.0 updated economic impact assessment

On 18 January 2023, the OECD announced increased forecasts for the tax effects of the ‘BEPS 2.0’ Two-Pillar Solution to reform the international corporate tax system. The changes update international tax rules in light of increasing digitalisation and globalisation of the economy. Pillar One, reallocating a portion of taxing rights for profits of the largest and most profitable multinationals, is now expected to allocate taxing rights on about USD 200 billion in profits to market jurisdictions annually. This is expected to lead to annual global tax revenue gains of between USD 13-36 billion, based on 2021 data. The new estimate reflects a significant increase compared to the USD 125 billion of profits in previous estimates, and also finds that low and middle-income countries are expected to gain the most as a share of existing corporate income tax revenues. In addition, the proposed 15 percent global minimum tax is now expected to result in additional annual global tax revenues of around USD 220 billion, or nine percent of global corporate income tax revenues. This is again a significant increase over the previous estimate of USD 150 billion for Pillar Two. The OECD has reiterated the importance of widespread adoption of the Two-Pillar Solution for tax certainty and stability, including reducing the proliferation of unilateral digital services taxes and the associated damaging tax and trade disputes.

Employer Financed Retirement Benefit Scheme registration

Employer Financed Retirement Benefit Schemes (EFRBS) that came into operation during 2021/22, must be registered with HMRC by 31 January 2023. In summary, an EFRBS will come into operation when the sponsoring employer first makes a contribution to the scheme, or relevant benefits are first provided to participants. Depending how an EFRBS has been established and operates, this registering obligation can fall on the scheme trustee or manager, or on the sponsoring employer. Once registered, there is an annual relevant benefits reporting obligation to HMRC due by 7 July following the end of the tax year.

Latest guidance on Transfer of Assets Abroad rules published by HMRC

HMRC have published their long-awaited amended guidance on the Transfer of Assets Abroad (ToAA) rules, which form a part of the International Manual. The ToAA rules are income tax anti-avoidance legislation, which applies where assets are transferred and income becomes payable to a person abroad. Broadly, an income tax liability will arise in relation to that income where either a UK resident individual was a transferor of the assets and can continue to enjoy the income, or any other UK resident individual receives a benefit from the arrangements. The definitions around transferor, ability to enjoy the income (‘power to enjoy’) and benefits received, are very wide and may apply in quite broad circumstances. This amended guidance follows publication, on 20 December 2013, of the outcome of consultations on the Reform of the ToAA provisions, which included draft guidance. KPMG in the UK made representations, including comments on the draft guidance published, as a part of the consultations. HMRC have engaged with the consultation process, taken on board some of the points made in representations and made some amendments to the draft guidance.

KPMG comments on the latest inflation figures

Yael Selfin, Chief Economist at KPMG in the UK, briefly comments on the latest figures which show a recent fall in inflation and looks at the year ahead.