Other news in brief

On 9 October 2024, the Government laid regulations to bring in the Independent Film Tax Credit (IFTC), which will provide an uplift of 19 percent to the existing Audio-Visual Expenditure Credit (AVEC) specifically targeted at low-budget British films (broadly those with a budget of up to £15 million, although it will effectively be tapered for those with a budget of up to £23.5 million). Companies will be able to apply to HMRC to claim the IFTC from 1 April 2025 (where principal photography began on or after 1 April 2024) and will be able to apply for certification for this enhanced uplift from 30 October 2024.

On 31 July 2024, HMRC first published a new Creative Industries Expenditure Credit Manual. Over the course of the subsequent months, additional chapters of guidance have been published and on 2 October 2024 all nine chapters finally became available. The new manual covers various areas including definitions, qualifying productions, eligible expenditure and claims.   

New HMRC Directions under regulations 3 and 10 of the Income and Corporation Taxes (Electronic Communications) Regulations 2003 were published on 2 October 2024, replacing the previous version published last year that have now been revoked. These Directions relate to certain Research and Development (R&D) notifications, including the Additional Information Form (AIF), which HMRC require to be submitted via a dedicated GOV.UK portal for all R&D tax incentives claims made since August 2023. In limited circumstances, HMRC accept submission by email but only where they specifically contact claimants to allow or invite them to do so. NB this is a backstop so that HMRC have an alternative method to gather the required information, e.g. in the event that HMRC’s online portal experiences technical issues. HMRC are clear, however, that claimants must use the online portal unless specifically told not to, and that there is no option to submit content via email simply because the claimant chooses or prefers to do so. The new Directions add a fourth category to the scope: “a notification under regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024 (a ‘Chapter 2 relief notification’)”, which relates to companies with a registered office in Northern Ireland.

On 2 October 2024 the OECD released the XML Schemas and associated User Guides for the automatic exchange of information between tax authorities under the CARF and amended CRS. The first exchanges under both the CARF and the amended CRS are expected to commence in 2027. Alongside these reporting materials, the OECD also published some frequently asked questions (FAQs) to provide interpretative guidance on the CARF and help ensure consistency in its implementation.

On 26 September 2024, HMRC published Corporation Tax Statistics 2024. The latest edition of the annual corporation tax (CT) statistics publication includes CT, Bank Levy, Bank Surcharge, Residential Property Developer Tax, Energy Profits Levy and Electricity Generator Levy receipts figures for the financial year 1 April 2023 to 31 March 2024. Total CT receipts increased by 10 percent (£8.8 billion) compared to the prior year, reaching £93.3 billion for the period. Financial and Insurance was the largest contributor to CT receipts in the Financial Year 2023-24, accounting for £20.2 billion (or 24 percent of the total). The second and third largest contributors were Wholesale & Retail Trade (10 percent) and Professional, Scientific and Technical (8 percent) respectively. According to the report, the overall increase was largely driven by the increase in the main rate of CT from 19 percent to 25 percent and the introduction of the Electricity Generator Levy, although there was some partial offset due to lower offshore receipts.

On 26 September 2024, HMRC published Research and Development (R&D) Tax Credits Statistics. The report provisionally estimates the amount of total R&D tax relief support claimed for the tax year 2022-23 was £7.5 billion, which corresponds to £46.7 billion of R&D expenditure.

On 26 September 2024, HMRC published Patent Box relief statistics. The report provisionally estimates 1,600 companies made a Patent Box election during 2022-23, 25 percent of which were ‘Large’. The value of the relief claimed in the year is estimated to have been £1,469 million, 94 percent of which was claimed by Large companies.

On 26 September 2024, HMRC published PAYE and corporate tax receipts from the banking sector statistics 2024. Receipts for the 2023-24 financial year totalled £37.1 billion (an increase of 9.6 percent). This is comprised of receipts from PAYE (£24.9 billion), corporation tax from the banking sector (£9.3 billion), Bank Levy (£1.4 billion) and Bank Surcharge (£1.5 billion).

In response to a perceived “growing tax risk driven by ineligible claims for employment expenses”, HMRC have published guidance on new evidence requirements for claimants which will come into effect from 14 October 2024. From this date, HMRC will require taxpayers who want to claim PAYE employment expenses to use a P87 form and provide supporting evidence to prove their eligibility before they progress the claim. HMRC provide some examples of the types of evidence they would expect to see such as receipts and copies of mileage logs and these should be sent by post alongside the P87. It has previously been possible to make such claims online and HMRC acknowledge that “an online claim route is more convenient” and they “are working at pace to reinstate the digital process as soon as possible”.

In their plan to ‘Make Work Pay’, the Government promised to bring in a “right to switch off”. How might this new right work in practice and how can employers plan for it? A recent article from our team in KPMG law explores this further.