Autumn Finance Bill completes its passage through the House of Commons, with all government amendments passed
Finance Bill 2024-25 had its report stage and third reading on 3 March 2025. In advance of this, on 25 February, a number of government amendments were tabled and updated explanatory notes published. The government amendments were in three areas:
- Scope of Inheritance Tax and non-doms – see our separate article in today’s edition;
- Additional relief for visual effects expenditure - minor amendments to clarify and correct the calculation of the relief; and
- Decommissioning of carbon storage installations – clarifications to the conditions to be satisfied for payments into decommissioning funds to be treated as decommissioning expenditure for ring fence tax purposes, including the requirement that a payment into a decommissioning fund must be certified by the Secretary of State in order for it to qualify and additional clarity around indirect payments.
All government amendments, but no others, were passed and the Finance Bill has now completed its passage through the House of Commons. It now moves to the House of Lords, however as Finance Bills cannot be amended by the Lords, (although there will be some debate), this is a formality and the Bill is now in its final form. For accounting purposes, for both UK GAAP and IFRS, the Finance Bill is also now considered to be ‘substantively enacted’.
OECD publishes Consolidated Report on Amount B incorporating all its agreed materials published during 2024
Amount B is the OECD’s recommended simplified and streamlined approach to transfer pricing for ‘baseline’ marketing and distribution activities. It is intended to reduce transfer pricing disputes and compliance costs for businesses and tax authorities and has been designed with a specific focus on the needs of low-capacity jurisdictions. On 24 February 2025, the OECD published a Consolidated Report on Amount B to pull together into one place the following materials it published last year:
- 19 February 2024: Final report on Amount B;
- 18 June 2024: Additional guidance on key definitions; and
- 26 September 2024: Model Competent Authority Agreement.
The OECD has confirmed that the content of the original publications has not been amended or modified, and the Consolidated Report simply replicates the original content for ease of reference. The OECD has also signalled its intention to publish an updated version of its Transfer Pricing Guidelines later this year which should then incorporate all this consolidated material.
OECD publishes report on taxing capital gains
On 26 February 2025, the OECD published a paper examining member countries experiences with taxing capital gains differently to other types of income. The paper also considers alternative approaches to taxing capital gains, should countries want to consider policy reform.
UK and Andorra sign first double tax treaty
The first Double Taxation Convention between UK and Andorra was signed in London on 20 February 2025. It will enter into force once both countries have completed their parliamentary procedures and exchanged diplomatic notes.
Creative industries tax relief guidance updated
On 24 February 2025, HMRC updated their guidance pages for the various creative industries tax reliefs available to note that from April 2025, in order to claim a relevant tax relief, the creative industries supplementary page (CT600P) must be submitted with all corporation tax returns. The page will require the additional deduction due to the company and any payable credit to be reported.
Changes to the capital gains deemed disposal rules for life insurance companies investing in CoACS
On 26 February 2025, HMRC published a policy paper outlining changes to the existing tax rules for the treatment of capital allowances within the annual deemed disposal rules for life insurance companies investing in co-ownership authorised contractual schemes (CoACS). The changes, announced at Autumn Budget 2024, are aimed at ensuring the rules work fairly and as intended. They address two anomalies that can arise for life insurance companies on computing a gain or loss on a deemed disposal of units in a CoACS. The first concerns the restriction of a loss where capital allowances have been claimed and the second concerns how structures and buildings allowances are clawed back. The changes take effect for accounting periods commencing on or after 19 March 2025 and the legislation is included within The Co-ownership Contractual Schemes (Tax) Regulations 2025.
Tackling non-compliance in the umbrella company market: consultation outcome published
The UK Government has published the outcome of the consultation ‘Tackling non-compliance in the umbrella company market’, which was launched by the previous administration. In summary, the Employment Rights Bill will be amended to define ‘umbrella companies’ and allow for their regulation by the Employment Agency Standards Inspectorate and, once established, by the new Fair Work Agency. The new regulatory regime for umbrella companies will be similar to that for employment businesses under the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The consultation outcome also confirmed that, as announced at the Budget in October 2024, the Government will bring forward legislation to move the responsibility to account for PAYE from umbrella companies that employ workers to recruitment agencies that supply their labour to an end client. If there is no agency in a labour supply chain the PAYE responsibility will sit with the end client. This change will take effect from April 2026. The Government intends to consult on draft legislation later this year.
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