Draft legislation for the Autumn Finance Bill 2022-23 is now available and it includes consultation on changes to capital gains tax, R&D tax relief, pensions and more. Some of the proposals are welcome, however, others may impact your business considerably. Here’s our overview of the main points
*ALL INFORMATION IS SUBJECT TO POTENTIAL CHANGE WITH THE ANNOUNCEMENT OF THE NEW UK PRIME MINISTER IN SEPT 2022*
We will be keeping a close eye on the following proposals and consultations over the next few months and will explain in future blogs how they could impact you and your business.
R&D tax relief
Proposal: Small companies who want to claim R&D tax relief will have to inform HMRC in advance of their intention to claim within six months of the end of the first period the claim will relate to. A senior officer of the company and the tax adviser will also both have to be named on the claim.
Reason: There are claims that this will make the R&D tax relief scheme less vulnerable to fraud.
Proposal: A new multinational top-up tax will ensure that this minimum level of tax applies in the UK from 31 December 2023.
UK businesses will also be required to keep evidence of transfer pricing decisions in a prescribed and standardised format.
Reason: Large multinational companies will have to pay a minimum of 15% tax in each jurisdiction they operate in.We welcome the following proposals as they relieve time pressures and deliver equity between all workers.
Consultations – HMRC data collection and Digitalising Business Rates
Two new consultations were announced.
- New powers for HMRC to collect data from businesses
- Digitalising business rates and how this data will be linked to the wider tax system.
Capital Gains Tax (CGT)
Proposal: Increase the CGT exempt period to 3 years for divorcing couples and allow any assets which are the subject of a divorce agreement to be transferred on a no gain/no loss basis without time limit.
Reason: Agreeing how the assets of a married couple, including the family home, are distributed between the two individuals can be complicated, Currently. transfers are only free from CGT if they occur within the same tax year as the separation – complicated financial situations often take longer than this to resolve. This will apply for all disposals that occur on and after 6 April 2023.
Proposal: Allow roll-over relief and private residence relief to apply to any gains arising to land and homes exchanged by LLPs or Scottish partnerships. This change is back-dated to 23 March 2022, when it was first announced.
Proposal: Employees on net-pay schemes will be able to claim a rebate from the government on the tax relief they are due but currently miss out on. This will take effect from the 2024/2025 tax year
Also, payments of periodic income will be considered authorised pension payments when they are made from a ‘collective money purchase pension scheme’ that is in the process of being wound up. This change will take effect from 6 April 2023.
Reason: Under auto-enrolment, many low paid employees pay pension contributions but do not earn enough to pay income tax. Therefore, they miss out on tax relief.
- Reforming the bands for air passenger duty to reduce the domestic band and add a higher band for ultra long-haul flights
- The Soft drinks levy will be extended to includes those dispensed from machines
- Exemptions for aggregates (construction material) will be streamlined into one
Two areas of tax treatment are clarified:
- Farmers who take payment from the lump sum exit scheme (LSES) will have the payment taxed as a capital gains tax
- Companies who allow their residential properties to be used for the Homes for Ukraine scheme will be exempt from ATED and the 15% rate of SDLT on those properties
We can help
The HB team is here to help with all your tax, cash flow and accounting questions and can help you make your money work harder for you and your business. If you would like to talk about how we can help you and your business, please feel free to contact the team on 01992 444466. We’re accountants for business and we’re here to help you survive and grow.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above