13 December 2024
Finance Bill 2024-25, the Finance Bill introduced to enact many of the Autumn Budget’s tax announcements, began its Committee Stages this week. The Bill’s provisions on capital gains tax rates and reliefs (Clauses 7 to 12 and Schedules 1 and 2), oil and gas taxation (Clauses 15 to 18 and Schedule 3), VAT on private school fees (Clauses 47 to 49), and stamp duty land tax (Clauses 50 to 53) were considered by MPs sitting in a Committee of the Whole House in two sittings of the Commons held on 10 December and 11 December 2024. The clauses and schedules considered were approved by MPs with no amendments made, and no new clauses were added to the Bill.
The Bill’s other clauses and schedules will be considered by a smaller number of MPs sitting in a separate Public Bill Committee. Dates for the Public Bill Committee hearings are yet to be announced. However, the Committee is due to conclude its work by 4 February 2025 at the latest.
On 10 December 2024, the Welsh government presented its proposed Budget for the 2025-26 tax year. As in previous years, the Welsh government proposes to keep the devolved rates of income tax applicable to the non-savings, non-dividend income of taxpayers resident in Wales aligned with England and Northern Ireland. The government announced one percentage point increases, generally with effect from 11 December 2024, to all bands of the ‘higher residential rates’ of Land Transaction Tax (LTT), applicable to certain purchases of second or additional residential properties. No changes to any of the other rates or bands of LTT were proposed.
On 9 December 2024, HM Treasury formally made the Controlled Foreign Companies (Reversal of State Aid Recovery) Regulations 2024 (SI 2024/1307). The regulations relate to the European Commission’s State aid decision of 2019 that argued that the exemption for certain financing income within Chapter 9 of the UK’s CFC rules, as it stood between 2013 and 2018, resulted in selective tax advantages contrary to EU State aid rules. Notwithstanding that the decision was subject to appeal, the UK was required by EU law to collect amounts of alleged unlawful State aid in the interim, which it did through the issue of charging notices to affected taxpayers under Schedule 7ZA of the Taxation (International and Other Provisions) Act 2010.
The Commission’s 2019 decision was subsequently annulled by a final judgment of the EU Court of Justice in September 2024, and these new regulations set out how HMRC will repay affected taxpayers. HMRC’s explanatory memorandum states that they will issue appropriate guidance on the application of these regulations, directly to affected taxpayers, by the time they come into force (i.e. by 31 December 2024).
Further to political agreement reached in May 2024, on 10 December 2024, EU member states formally adopted a new directive for “the faster and safer relief of excess withholding taxes” (the ‘FASTER’ directive). Currently, withholding tax relief procedures vary between member states, leading to inefficiencies for non-resident investors seeking tax relief. The directive aims to make procedures more efficient, whilst also protecting against withholding tax fraud. The directive includes requirements for members states to implement quick automated processes to issue their residents with digital tax residence certificates (‘eTRCs’) in a common EU format; together with possible fast-track procedures (either a relief-at-source procedure; or quicker refunds within set deadlines) to complement existing withholding tax refund procedures. The directive will also create related standardised reporting and due diligence obligations for certain financial intermediaries. The text of the directive will shortly be published in the Official Journal of the European Union and will enter into force 20 days after publication. Member states will need to transpose the directive into national legislation by 31 December 2028, with new national rules to come into effect from 1 January 2030. See Deloitte Tax@Hand for more details.
On 11 December 2024, the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Taxation (CIOT) released a joint report titled Tackling HMRC’s customer service challenge. The report sets out the key findings of a six-week research study performed by the Institutes into HMRC’s current customer service system, together with ten recommendations for improving service going forward. Among the key findings are that callers to HMRC’s phonelines faced average wait times before connection of 19 minutes. Of those connected, only 34% resulted in full resolution, and the average satisfaction rating for phonelines was 56%. Recommendations from the report include: ensuring that there are appropriate routes to escalate complex cases to help resolve problems more effectively without prolonged and repeated interaction; investing in increased customer service staffing and training; and identifying and plugging gaps in digital services to ensure investment is targeted at making meaningful changes to the digital services that taxpayers and agents want and need. The Institutes also propose the introduction of a mechanism to allow taxpayers and agents to track that HMRC have received correspondence and to check HMRC’s subsequent progress.
On 29 November 2024, Douglas Alexander MP (Minister for Trade Policy) issued a written ministerial statement providing an update on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The statement confirmed that the UK will accede to the CPTPP on 15 December 2024, and that the Agreement will come into force on that date with Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam. The Agreement will enter into force with Australia on 24 December 2024, following Australia’s recent ratification of the UK’s accession. For a summary of the CPTPP’s content and potential implications for UK businesses, please see this Deloitte article from when the UK signed the Agreement in 2023.
The EMEA Dbriefs programme is taking a brief break now for the holiday period. If you want to be informed about upcoming webcasts throughout 2025, please subscribe to receive our mailings. In the meantime, you can catch up on demand with any recent webcasts you may have missed, including: Pillar Two and M&A – a practical guide; Mandatory payrolling all benefits in kind – the end of P11Ds; E‑invoicing – a journey of compliance and transformation; Unleashing the value of employee benefits and Tax impact of EU Deforestation-Free Regulation and the Carbon Border Adjustment Mechanism.
Deloitte’s Business Tax Briefing is taking a break for Christmas and the New Year. The next edition will be published on Friday 10 January 2025.