Tax Day consultations launched

23rd March 2021

The Treasury has issued a series of tax consultations which were not issued as part of the Budget 2021 announcements.

More than 30 tax updates have been published including consultations to reform the UK tax system.

There appears to be nothing on Capital Gains Tax, which will come as a relief to many.

The Treasury has published:

A call for evidence on the tax administration framework to create a modern tax administration system that is simpler, easier to navigate, and meets the needs of taxpayers.
A consultation on potential changes to Air Passenger Duty that could improve connections across the UK and regions by cutting the tax on domestic flights. The consultation also seeks views on supporting the UK’s commitment to net zero emissions by 2050 by increasing the number of international distance bands. This would reinforce the “polluter pays principle”, by ensuring that those who travel furthest internationally, and consequently have the greatest impact on the environment, incur the most duty.
An interim report on the government’s Fundamental Review of Business Rates, which sets out a summary of responses to last year’s call for evidence. The final report will be published in the Autumn.

Second homes etc.

The government says it will legislate to tighten tax rules for second property owners meaning they can only register for business rates if their properties are genuine holiday lets.

Also as part of the release, the government has announced it will legislate to tighten tax rules for second property owners meaning they can only register for business rates if their properties are genuine holiday lets.

In England, many holiday lets are liable to pay business rates, rather than council tax, when an owner declares that they intend to let their property in the next year. They may also be able to claim rates relief of up to 100%.

The change announced today will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out.

On second home tax changes:

In England, a holiday let is currently liable to pay business rates rather than council tax when the owner declares they intend to make their property available to let 140 days in the coming year. There is no requirement for business rates purposes to undertake checks to verify that they are actually commercially rented out.
of the over 60,000 holiday lets currently on the business rates list, around 96% have a rateable value which would likely qualify them for Small Business Rates Relief and as a result pay no business rates at all
the new criteria will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out.
further details of the change and implementation will be included in a MHCLG response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly

Inheritance tax and probate

In response to a report from the Office of Tax Simplification, the government says it will

change reporting regulations so that from 1 January 2022 over 90 per cent of non-taxpaying estates each year will no longer have to complete Inheritance Tax forms for deaths when probate or confirmation is required; and
make permanent the ability for those dealing with a trust or estate to provide an Inheritance Tax return without requiring physical signatures from all others involved, easing the administration burden in cases where an Inheritance Tax return is still required.

The following papers have been issued today (see the Treasury's summary of what they mean):

Queen's Speech

The State Opening of Parliament will take place on Tuesday 11 May.

The Queen’s Speech will set out the Government’s agenda for the next session and its plans to build back better from the pandemic and level-up opportunities across the country.

The Queen’s Speech will also confirm the continuation of a number of bills carrying over from this parliamentary year, including the Police, Crime, Sentencing and Courts Bill, the Environment Bill and the Armed Forces Bill.

The Government has also already confirmed it will introduce legislation to improve the building safety regulatory regime, reform our asylum system and to repeal the Fixed-term Parliaments Act.

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