A set of draft legislation, together with policy papers and consultations were published on 20 July 2021, for inclusion in Finance Bill 2021-22. These are our edited highlights of the proposed new legislation.

Further details of other ongoing consultations and proposals see our 2021 Tax Planner and Rolling Update 2021-22.


Income Tax 

  • HMRC have published a consultation ‘Basis period reform’, policy paper and Finance Bill 2022 draft legislation which proposes a simplification of the Income Tax rules for the self-employed by allocating trading profit to tax years regardless of the business’ accounting period end date.
  • This would take effect from 2023-24 with a transitional period in 2022-23. It is a measure to assist in reporting under Making Tax Digital for Income Tax.
  • Policy paper and draft legislation: Income Tax: basis period reform 
  • Consultation: Basis period reform 

See Consultation: Income Tax Basis Period reform


Pensions 

Increasing the normal minimum pension age

  • It is proposed that Finance Bill 2022 will include a measure to increase the Normal Minimum Pension Age (NMPA) from 55 to 57, from 6 April 2028.
  • The NMPA is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payment tax charge unless they are retiring due to ill-health
  • Policy paper and draft legislation: Increasing the normal minimum pension age for Pensions Tax

See Pensions: Unauthorised payment charges

Pension Scheme Pays reporting: information and notice deadlines

  • It is proposed that Finance Bill 2022 will include a measure to require pension scheme administrators to pay when requested by a scheme member within an extended deadline, annual allowance charges exceeding £2,000 which arise due to a retrospective change of facts.
  • Scheme administrators will be required to provide a new or revised pension saving statement and the deadline for the administrator to report and pay the charge will also be extended.
  • Policy paper and draft legislation: Pension Scheme Pays reporting: information and notice deadlines

See Pensions: tax charge for excess contributions


Capital allowances

Amendment to allowance statement for structures and buildings allowance


Corporation Tax

These initial proposals are unlikely to affect most Small to Medium-sized Enterprises (SMEs) and OMBs. They include:

Changes to the definition of asset holding companies in alternative fund structures

  • A qualifying asset holding company must:
    • Be at least 70% owned by diversely owned funds, these must be managed by regulated managers or certain institutional investors
    • Exist to help move capital, income and gains between investors and underlying investments

Amendments to REITS

  • The measure amends the tax rules that apply to Real Estate Investment Trusts (REITs). It also makes changes to conditions that a company must meet to be a UK Real Estate Investment Trust.

Amendments to hybrid and other mismatches rules

Large business: notification of uncertain tax treatment

  • Large businesses are those with a:
    • Turnover of more than £200 million per annum.
    • Balance sheet total over £2 billion.
  • Will be required to notify HMRC where they have adopted an uncertain tax treatment, as defined by notification criteria set out in legislation.
  • Large businesses: notification of uncertain tax treatment Policy paper


Anti-avoidance 

New proposals to clamp down on promoters of tax avoidance

Following an April 2021 consultation, proposed legislation for Finance Bill 2022 will give HMRC new powers to:

  • Prevent promoters of tax avoidance schemes from dissipating or hiding assets before paying penalties charged.
  • Levy penalties against UK entities that facilitate the promotion of tax avoidance by offshore promoters.
  • Present winding-up petitions for companies operating against the public interest.
  • Publish details of promoters and their schemes to raise awareness and give those already involved to exit the arrangements.
  • Policy paper, New proposals designed to clamp down on promoters of tax avoidance arrangements
  • See Rolling Planner 2021-22 for details of consultations and responses.

 

Powers to tackle Electronic Sales Suppression (ESS)

  • It is proposed that Finance Bill 2022 will include a measure to make offences of the possession, making, supplying and promotion of ESS software or hardware.
  • ESS-specific information powers will also be introduced to allow HMRC to identify developers and suppliers in the ESS supply chain and access software developers’ source code.
  • Policy paper and draft legislation: Powers to tackle electronic sales suppression

Other

Insurance Premium Tax 

Tobacco


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