Other news in brief

Chancellor sets out growth plan and confirms new Investment Zones will go ahead

On 27 January 2023, the Chancellor, Jeremy Hunt, delivered a speech on the Government’s plans for growth. Whilst the speech didn’t include any specific fiscal announcements (these will “have to wait for Budgets and Autumn Statements in the years ahead”) the Chancellor set out his vision for the UK tax system. He stated “our ambition should be to have nothing less than the most competitive tax regime of any major country.” Key to this vision is the need for lower taxes as “high taxes directly affect the incentives which determine decisions by entrepreneurs, investors or larger companies about whether to pursue their ambitions in Britain”. However, the Chancellor was clear that in the short term, the Government will not cut taxes as its immediate priority is to “provide economic and financial stability. So the best tax cut right now is a cut in inflation.” Additionally, the Chancellor confirmed plans for new Investment Zones “supporting each one of our growth industries, and each one focused in high potential but underperforming areas… They will be focused on our research strengths… with advantageous fiscal treatment to attract new investment”. He also confirmed that the Government “will shortly start a process to identify exactly where they will go”.

HMRC reminder letters on the Certificate of Tax Deposit scheme ending on 23 November 2023

It is understood that HMRC have been issuing letters as a reminder to taxpayers to use any remaining Certificates of Tax Deposit (CTDs) before the scheme ends on 23 November 2023. Through the CTD scheme, taxpayers could deposit funds with HMRC and earn daily interest and then use those funds later to pay certain tax liabilities. However, since 23 November 2017, it has no longer been possible to purchase new CTDs through the scheme. Existing certificates will continue to be honoured until 23 November 2023 but after that date refunds should be requested promptly from HMRC for any certificates remaining.

HMRC late payment interest rates to be revised after Bank of England increases base rate

On 2 February 2023, the Bank of England Monetary Policy Committee voted to increase the Bank of England base rate to 4 percent from 3.5 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 6 percent to 6.5 percent. Interest charged on underpaid quarterly corporation tax instalment payments is calculated as base rate plus 1 percent so this will increase to 5 percent. These changes will come into effect on 13 February 2023 for quarterly instalment payments and 21 February 2023 for non-quarterly instalment payments. HMRC will also increase their repayment interest rate for most taxes to 3 percent, as it is set at Bank Rate minus 1 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 3.75 percent.

KPMG comments on Bank of England money and credit data

Karim Haji, EMA and UK Head of Financial Services at KPMG in the UK, comments on the recently published Money and Credit data from The Bank of England, stating “with high consumer spending over the Christmas period came another increase in borrowing. We can expect to see the knock-on impact of that on the economy in the next two months, with a slowdown in consumer spending”.