Autumn Finance Bill completes Committee stage without amendment
Further to the Committee of the Whole House which took place on 10 January 2024, the remainder of the Autumn Finance Bill was considered by the Public Bill Committee on 16 February. All of these remaining provisions were agreed without amendment. The next steps are report stage and third reading which are scheduled for 5 February 2024.
Government tax simplification update
On 16 January 2024, HMRC published a simplification update, summarising some of the ways the Government is aiming to simplify and modernise the tax system. Within the update was a response by the Government to the transfer pricing, permanent establishment and Diverted Profit Tax consultation and a plan to mandate the payrolling of benefits in kind – both of which are discussed in greater detail in this edition of Tax Matters Digest. In addition to these, a consultation will be running until 9 April 2024 which proposes changes to the capital gains tax treatment applicable to alternative finance arrangements, such as Islamic finance. Currently there are unintended capital gains consequences of alternative finance arrangements, in particular when property is used as collateral to raise finance. The Government is therefore looking to align the capital gains treatment with conventional financing. Finally, the Government is looking at National Insurance credits for non-child benefit claimants to maintain their State Pension entitlement, and a new on-line service for employees to claim tax relief on non-reimbursed expenses.
HMRC update Capital Allowances Manual to clarify position on Partnerships
On 15 January 2024, the Capital Allowances Manual was updated to confirm corporate partners within a partnership can claim capital allowances, providing the corporate members are within the charge for corporation tax. This includes eligibility for first year allowances such as full expensing and the super-deduction, assuming the usual criteria are met. Implicitly this means that unincorporated partners in a partnership will not benefit from the scheme, although the £1 million annual investment allowance may still be available.
HMRC consult on the Off-Payroll Working (OPW) offset mechanism
If the OPW rules apply to an engagement, the ‘deemed employer’ (usually the fee-payer) must operate PAYE and NIC (and Apprenticeship Levy, where relevant) on amounts paid to a worker’s intermediary. The deemed employer is currently liable for all payroll withholding lost due to any errors applying the OPW rules. However, from 6 April 2024, HMRC will be able to offset certain taxes paid by workers and their intermediaries against a deemed employer’s PAYE and NIC liabilities for any errors. HMRC are now consulting on draft implementing regulations; and draft guidance on the application and process of, and appeals against, the OPW offset. The consultation closes on 22 February 2024, and we are currently considering a formal response. Please contact your usual KPMG in the UK contact if you would like to discuss the potential impact HMRC’s proposals might have for you, or any matters you would like us to consider reflecting in any consultation submissions we might make. We will comment on the details of the proposed OPW offset in a future edition of Tax Matters Digest.
Building Safety Levy: Government response to earlier consultation and new consultation published
On 23 January 2024, the Government published its response to the consultation on a new Building Safety Levy which ran from 22 November 2022 to 7 February 2023. The response confirms a number of exclusions from the levy including affordable housing, care homes and children’s homes and that local authorities will act as the collection agents. Alongside the response document, a further technical consultation was published seeking views on the design and implementation of the levy. This further consultation will close on 20 February 2024.