Tax Update provides you with a round-up of the latest tax developments. Covering matters relevant to individuals, trusts, estates and businesses, it keeps you up-to-date with tax issues that may impact you or your business. If you would like to discuss any aspect in more detail, please speak to your usual Smith & Williamson contact. Alternatively, Ami Jack can introduce you to relevant specialist tax advisors within our firm.
1.1 Autumn Budget 2021
On 27 October, the Chancellor delivered his second Budget this calendar year. Despite speculation that this Budget could bring significant tax changes, it was light on tax announcements. Our website, linked below, includes our full coverage and analysis.
Overall, this Budget was light on tax announcements, with nothing major on income tax, national insurance, CGT, or IHT. The new health and social care levy had already been announced some weeks ago. The main announcements for businesses are the extension of the increased annual investment allowance, the reform of research and development tax reliefs, and the details of the residential property developer tax.
You can read our full coverage at the link below. This covers the key announcements and commentary on what each measure will mean in practice, together with articles explaining the impact of the changes on various sectors.
On 10 November we will be holding a post-Budget webinar.
2. Private client
2.1 HMRC ‘educational’ letters: cryptoassets
HMRC has announced a new campaign of ‘educational’ letters. This batch of letters is targeted at those taxpayers who HMRC believes have held cryptoassets, advising them of the potential tax implications of making a disposal and signposting relevant guidance.
These letters will be sent in November to individuals whom HMRC believes have held cryptoassets, based on information HMRC has obtained from third parties. It has previously been reported that HMRC was seeking to obtain data from crypto platforms on their customers.
The letter explains what a disposal of a cryptoasset is, including exchanging it for currency and exchanging one cryptoasset for another. It highlights when CGT may be payable, with links to further guidance. It asks recipients to review their transactions, and explains what to do if they have failed to report taxable disposals.
2.2 HMRC ‘nudge’ letters: foreign tax credit relief
HMRC has announced a new campaign of ‘nudge’ letters, sent to taxpayers that HMRC believes may have incorrectly reported an event, as a way of encouraging them to get their affairs in order without starting a formal enquiry. This batch of letters is targeted at those taxpayers who may have incorrectly claimed foreign tax credit relief.
These letters will be sent in November to taxpayers whom HMRC believes received foreign investment income in 2019/20, and claimed foreign tax credit relief at the wrong rate. They will be asked to check the relevant article of the double tax treaty between the UK and the country their investment income arose in, and make any necessary corrections to their return. The letter provides links to further guidance.
3. Trusts, estates and IHT
3.1 Regulations to increase excepted estate numbers published
From 1 January 2022, fewer estates will have to complete IHT returns, as the categories for exemptions are being broadened to include most non-taxpaying estates. This was previously announced, but the legislation has now been published.
Currently, many executors have to file IHT returns for estates that are not due to pay IHT, in order to obtain probate, as the categories for excepted estates are relatively narrow. They are to be extended, which will not change anything for taxpaying estates, but will reduce administration costs for small estates. This was announced in March 2021. The legislation has now been published. This will come into force on 1 January 2022.
There are various changes, which include:
- for estates with a gross value over the IHT threshold, but with a net value after deducting exempt legacies and expenses under the threshold, the reporting limit for gross value will be increased from £1m to £3m;
- for estates with a total gross or net value below the IHT threshold, the reporting limit for chargeable lifetime transfers in the seven years before death will be increased from £150,000 to £250,000; and
- administrative changes on how much information these estates need to provide to HMRC instead of an IHT return will be made.
4. Tax publications and webinars
4.1 Tax publications
The following Tax publications have been published.
- Autumn Budget 2021: Income taxes
- Autumn Budget 2021: Capital taxes
- Autumn Budget 2021: Business taxes
- Autumn Budget 2021: VAT and indirect taxes
- Autumn Budget 2021: Much Ado About Nothing for individuals and business owners
- Autumn Budget 2021: Financial services sector continued to be supported
- Autumn Budget 2021: Changes for real estate developers & the UK funds sector
- Autumn Budget 2021: International Tax and subtle but important changes for the post-Brexit economy
4.2 Tax podcasts
The following Tax podcasts are now available.
The following client webinars are coming up over the next week.
- 10 November 2021: S&W Sessions: Autumn Budget 2021
- 11 November 2021: Investment and Tax Planning for multi-jurisdictional client
5. And finally
What a desperately dull tax Budget that was! There will be those who are happy for sleeping dogs to be let lie, no matter how flea-ridden they are. And finally sees things from a different point of view. It’s not that we have an agenda; it’s just that we love change in tax, almost without regard to what the change is, or how merited. Rate rises and rate reductions are all the same to us: any change is fun.
We did get an entirely new levy: the Economic Crime (Anti-Money Laundering) Levy. That’s the second levy in weeks. What’s the Government getting at with these levies? Are we to suppose that a levy is just to pay for something specific? Perhaps the health and social care levy is so called because it isn’t national insurance, but national insurance itself is hardly all for national insurance. Don’t be taken in by this imposture; it’s all tax in the end. ‘Levy’ might get worn out pretty quickly. How, then, about ‘impost’ instead? What’s an impost? Something levied of course. Levied? Raised as tax, silly.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.