A Review of ‘Tax Day’
“Tax Day” is probably not a day that fills many people with excitement other than a tax adviser. It is a newly created day on which HMRC publish consultations regarding their future plans for the tax system. Consultations can help give an insight into the potential changes coming in future budgets as well as giving an opportunity for professional bodies to feedback their views on potential changes. Historically, these have been included as part of the budget but this year they have been released on a separate day.
Given the current economic position, it was widely expected that a consultation on at least one large change to the tax system could be announced, with Capital Gains Tax and Inheritance Tax particularly in the limelight following recent publications from the Office of Tax Simplification, covering these areas.
Whilst no significant changes were proposed in respect of CGT or IHT, the following are some of the key points:
Making Tax Digital – HMRC intend to proceed with MTD for self-assessment from April 2023. This will require self-employed individuals or those with rental properties to submit quarterly returns.
Timing of tax payments – HMRC have released a consultation in respect of timely payment of tax. This will cover both individuals and company and look at tax that is not paid until the end of the year to see whether more regular tax payments could be made based on in year information.
Inheritance Tax – Reporting requirements will be simplified so that from 1 January 2022 over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms.
Residential Property Developer Tax – HMRC will announce a new tax for the largest residential property developers. The aim of this is to raise funds to help pay for the cost of cladding remediation.
Business rates for Holiday Lets – HMRC will change the criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented.
Review of business rates – including the overall level of the tax, revaluations, administration and alternatives to business rates.
Although more wide ranging changes were not covered in the consultations, HMRC could still look to change these in the future.