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:

The ink on the Budget is barely dry and fall-out from some of the announced measures continues, but the Government is moving apace with its agenda.

On 14 November, the Chancellor of the Exchequer gave her first Mansion House speech. Some wondered if tax would feature but instead the message was one of “invest, invest, invest” riffing off the term she introduced in her Budget speech. Announcements covered additional public investment in infrastructure projects and full fibre broadband, a new Financial Services Growth and Competitiveness Strategy to be unveiled in spring 2025, and reforms to local government pension schemes (in part intended to encourage investment in UK assets). With investment initiatives around pension funds, the NHS and potentially housing, the key question remains whether this will produce sufficient growth and consequential tax revenues to ease the pressure on public finances, and whether it will happen in time for the next election.

A week before the Mansion House Speech the Finance Bill dropped and an overview of the Bill is our spotlight article for this edition. The Bill contains draft legislation for many of the Autumn Budget measures such as the residence based IHT system and Non-Dom reforms, but not the employer’s National Insurance Contribution increase which is in a separate Bill published on 13 November. Less headline grabbing measures included in the Bill are legislation providing the Treasury with powers to make regulations to implement the OECD Crypto-Assets Reporting Framework (CARF), two new changes to the R&D regime which impact on loss-making intensive small and medium-sized enterprises regime and changes to SDLT on residential property.

We have a further two articles dedicated to specific aspects of the Finance Bill. The first covers amendments to the Pillar Two rules in Finance (No 2) Act 2023 in relation to the Undertaxed Profits Rule, anti-arbitrage rules, flow-through entities and the domestic top-up tax, as well as draft legislation to repeal the Offshore Receipts in respect of Intangible Property (ORIP) rules. The second article highlights draft legislation in the Bill which introduces proposed additional relief for VFX costs under the audio-visual expenditure credit as confirmed at Autumn Budget, and where the changes are not straight forward.

The Budget announced changes to Business Rates and included a discussion paper inviting views on how the Government can reform the system. In the meantime, the snappily named Non-Domestic Rating (Multipliers and Private Schools) Bill was published containing draft legislation to introduce higher non-domestic rating multipliers for large businesses, lower multipliers for retail, hospitality and leisure businesses. Our article looks at these latest developments and their impact ahead of the 2026 revaluations.

No edition of Tax Matters Digest is complete without some mention of Transfer Pricing and so we have delved into the recently published OECD Mutual Agreement Procedure and Advance Pricing Agreement statistics for 2023 to highlight trends and insights which will be of interest to multinationals. Continuing the international theme, we highlight Tim Sarson’s latest column in City AM which looks at what Trump’s second presidency means for UK businesses and their tax bills.

As usual we bring you our Other News In Brief highlighting new practical guidance from HMRC on Pillar Two top up taxes, changes to the penalty regime for interest on late payment of tax and guidelines for compliance on the patent box and apprenticeship levy. We also have our usual indirect Tax Talking Points and our Week in Tax roundup of developments from KPMG member firms around the world.