Finance Bill 2024-25

The Bill includes legislation providing the Treasury with powers to make regulations to implement the CARF in the UK. This follows the Government’s reiteration of the UK’s commitment to adopt the framework at the Autumn Budget, when it also took the further step of applying it to UK resident taxpayers which means that all UK investors into cryptocurrency should be reported to HMRC either by UK institutions or overseas institutions. Both requirements will come into force from 1 January 2026, with first reporting by 31 May 2027.

The proposed regulations, a draft of which are currently open for consultationopens in a new tab, confirm that HMRC will apply a per account penalty for failures to comply, rather than the flat penalty applied today for the Common Reporting Standard (CRS).The penalties under CRS will also be changed to a per account penalty. The proposed regulations also include provisions allowing HMRC to fine UK crypto users who fail to provide a self-certification when requested. Although this provision is intended to make it easier for in-scope organisations to collect documentation, there may be concerns about the impact on customer relationships where fines are levied.

The Bill introduced two new changes to the R&D incentives regime, and both impact the loss-making R&D intensive small and medium-sized enterprises (SME) regime only. No changes have been made to the new merged R&D Expenditure Credit (RDEC) scheme introduced with effect for accounting periods beginning on or after 1 April 2024.

The first change impacts loss making R&D intensive SMEs with a registered office in Northern Ireland. The changes provide a bespoke version of the intensive SME scheme to Northern Ireland registered companies. They may benefit from the enhanced relief in excess of the benefit they would obtain under a RDEC claim up to a rolling cap of €300,000 and are not subject to the overseas restriction applying to expenditure incurred on subcontracted R&D or Externally Provided Workers. Companies that have no element of trading in goods and no relevant activities in relation to the electricity market may opt out of the Northern Ireland version and this will mean that the above overseas restriction does apply but there will be no cap on the amount of benefits. The new rules will apply to claims made on or after 30 October 2024. Companies claiming enhanced SME relief and registered in Northern Ireland should seek advice on how these changes may impact future claims.

The second change is intended to correct a previous error. Companies seeking to make a loss-making R&D intensive SME claim for the period between 1 April 2023 to 31 March 2024 may, when looking at the R&D intensive requirement, include expenditure eligible for both the SME scheme and RDEC scheme in determining if the R&D expenditure is at least 40 percent of relevant total expenditure. This was always the intention, but the legislation omitted the inclusion of RDEC expenditure meaning some companies who should have benefitted may have failed to meet the intensive threshold. SMEs that have claimed RDEC expenditure in the period between 1 April 2023 to 31 March 2024 and meet the other requirements should revisit whether they would be eligible for a claim under the more generous intensive SME regime.

Stamp Duty Land Tax (SDLT)

For further information please contact:

• Tim Sarsonopens in a new tab
• Sharon Baynhamopens in a new tab