What does the Treasury’s Tax Policies and Consultations mean for you?
On 23rd March, the Treasury issued 30 consultations on different strands of taxation and the UK’s tax administration system in Tax policies and consultations, Spring 2021.
In its paper, it states: “the tax system needs to reflect wider economic, social and policy change in order to ensure it remains effective.” This is clearly a reflection on the change we’ve witnessed over the past 12 months as aspects of society have gone much more digital, but also an opportunity to review aspects of taxation that have been in the Treasury’s crosshairs for a while.
The usual suspects were spared any treatment at this stage, which is probably the headline. Capital Gains Tax and Pension Tax Relief were both widely tipped to be part of a review, but that will wait, at least until the Autumn.
This is a round-up of areas covered in the Treasury’s paper.
“From 1 January 2022 over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms for deaths when probate or confirmation is required. In addition, the current temporary provision for those dealing with a trust or estate to provide an inheritance tax return without requiring physical signatures from all those involved will be made permanent.”
This will be welcomed by everyone. Anything that eases the burden of managing estates is good news.
Self-assessment and business taxes
“The government is publishing a call for evidence to begin to explore the opportunities and challenges of more frequent payment of income tax within Income Tax Self Assessment, and of corporation tax for small companies, based on in-year information.”
This is part of the Treasury’s desire to modernise and simplify, as well as to avoid the crush of tax year end.
There will also be a review of business rates in totality, which will be welcomed by businesses using physical premises, who have long argued that the system disadvantages them in comparison to online businesses.
“The responses did not indicate a desire for a comprehensive reform of trust tax at this stage. The government will keep the issues raised under review.”
Importantly for financial planners, there appears to be no change to the treatment of trusts at this stage, as that may have triggered some complex work.
In summary, the paper was very technical and with much of it going to consultations, there wasn’t a lot to chew on at this stage. This is a 10-year strategy though, so within the framework of simplification and digitisation, it is reasonable to assume that those areas of taxation not addressed today, will be addressed in the future.
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IMPORTANT: Wren Sterling is not a tax adviser