Tax Matters Digest

To go straight to the articles in the latest edition please scroll down and expand the section/s below that are of interest to you. For a preview of these articles, read the introduction to the latest edition from Sharon Baynham here:

On 4 July 2024 the UK elected a Labour Government with a significant majority. Cabinet appointments have been made and the new Government is beginning to take shape.

One of the first points at which we see the new Government’s agenda is when we hear the Kings Speech, which took place on 17 July, just as I was writing this. There is normally precious little tax content in these speeches because tax policy changes are usually included within a yearly (or twice-yearly) Finance Bill and so don’t get picked out for special attention. This time, however, there were a couple of specific tax mentions: the replacement of the apprenticeship levy with a growth and skills levy, and the removal of the VAT exemption for private school fees. The Speech also confirmed, as anticipated, that legislation will be passed to lock in Labour’s manifesto pledge that every fiscal event making significant changes to taxation or spending will be subject to an independent OBR forecast.

With very little detail on tax in either the Labour manifesto and the King’s Speech, we thought we would write a little clutch of articles on what the new Labour Government could mean for tax policy across different areas. So our spotlight article is on what a Labour Government will mean for business tax policy. This is followed by two further articles; one highlighting what a Labour government could mean for employers and another on the tax implications for individuals. We also include, in other news in brief, an article setting out prospective Employment Law changes under a new Labour Government.

Many are asking when the next Budget will be and we answer this in detail in the article on business tax policy. The long and the short of it is that we expect it to be in the Autumn, probably November. But you don’t have to rely on our best estimate for long because Rachel Reeves has said that she will confirm the date of the Autumn Budget before Parliament breaks for summer recess.

Despite the political changes afoot, court judgments continue to be handed down. This week the Supreme Court dismissed the taxpayer’s appeal in Centrica Overseas Holdings Ltd v HMRC concerning whether fees on the disposal of a subsidiary business were deductible as management expenses. Our article on the case has more information on the decision. The First-tier Tribunal has also published an interesting decision on R&D tax credits, making a number of findings that will be of practical use to companies making their own R&D claims.

We have two articles for employers in this edition. The first covers what to do if your recent share plan reporting uncovered payroll withholding problems. And the second highlights a recent trend where HMRC are sending nudge letters to insurance businesses asking them to confirm they are complying with Construction Industry Scheme requirements.

In Other News In Brief we highlight a report from the OECD publishing Corporate Tax statistics which show that average corporate tax rates have remained steady at 21.1 percent following a steady decline since 2000. The OECD believes this may be due to the ongoing implementation of the global minimum tax. We include our round up of international news in our Week in Tax section as well as a link to Tim Sarson’s latest International Tax round-up as published in Tax Journal.

And finally check out our round up of Indirect Tax Talking Points where the ongoing saga of the VAT treatment of jumbo marshmallows continues.