15 November 2024
National Insurance and business rates bills published
On 13 November 2024, the National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-25 was introduced by the government and had its first reading in the House of Commons. The text of the Bill has been published on parliament’s website together with its Explanatory Notes. This Bill will implement, with effect from 6 April 2025, several National Insurance Contributions (NICs) announcements in the Autumn Budget including: the decrease in the employer secondary Class 1 NICs threshold from £9,100 to £5,000 per year; the increase in the employer secondary Class 1 NICs rate from 13.8% to 15%; the increase in the maximum Employment Allowance from £5,000 to £10,500; and the removal of a £100,000 eligibility threshold that currently applies to the Employment Allowance. HMRC have published a tax information and impact note on the Bill’s contents.
On the same day, the Non-Domestic Rating (Multipliers and Private Schools) Bill also had its first reading in the Commons. The text of the Bill together with its Explanatory Notes has also been published on parliament’s website. The Bill will implement certain Autumn Budget business rates announcements in England, including: powers to create new lower business rates multipliers for qualifying retail, hospitality and leisure properties and higher multipliers for high value properties from April 2026; and the removal of the eligibility of private schools for charitable business rates relief from April 2025. HM Treasury have published a press release on the Bill’s business rate multiplier changes.
HMRC publish guidance on Patent Box and Employment Allowance ‘connected entity’ rules
On 7 November 2024, HMRC published two new sets of guidance documents as part of their series of Guidelines for Compliance (GfC). GfCs offer HMRC’s views on complex, widely misunderstood or novel risks that can occur across tax regimes:
· Help with Patent Box computations – GfC9 relates to corporation tax’s Patent Box rules, and describes a number of common errors that HMRC have observed in companies’ Patent Box computations. It sets out recommended approaches for business to consider to reduce the risk of such errors occurring in their Patent Box calculations, together with best practice recommendations on supporting information to include with submitted tax returns and HMRC’s recommended approach to record keeping.
· Help with the Apprenticeship Levy and Employment Allowance – connected entities – GfC10 discusses the £15,000 annual allowance for Apprenticeship Levy liabilities, and the £5,000 annual Employment Allowance for Class 1 Secondary National Insurance Contributions (increasing to £10,500 from 2025-26 – see previous item) available to certain employers, and restrictions and additional considerations that can apply where an employer is ‘connected’ to other entities. Separate parts of the guidance are provided focussing on common errors from the application of the connected entity rules to companies, public bodies, and charities respectively.
New Romania-UK double tax treaty signed
The governments of the UK and Romania announced the signing of a new double taxation agreement and protocol on 13 November 2024. The English language version of the text has been published by HMRC here. The new agreement and protocol, which are not yet in force, will introduce a number of changes compared to the current double tax treaty (the 1975 Romania-UK convention, as modified since 2023 by the BEPS Multilateral Instrument). These include reductions in the maximum treaty withholding tax rates (in certain cases to 0%) on cross-border payments of dividends, interest and royalties provided, amongst other things, the conditions set out in Articles 11, 12 and 13 respectively are met. The new agreement and protocol will enter into force and effect, in accordance with the timings in Article 28, only once both countries have completed their domestic parliamentary procedures for ratification and have notified each other accordingly.
Hungary – 31 December 2024 Pillar Two registration deadline
Like many countries worldwide, Hungary has adopted legislation to implement the OECD Inclusive Framework’s Pillar Two global minimum tax rules with effect from 2024. The Hungarian law currently includes a registration requirement that may require in-scope groups with calendar year-ends to complete an initial Pillar Two registration with the local tax authorities by 31 December 2024. The related registration form, confirming the information required, has not yet been published. Please contact your local Deloitte Hungary contact for further information.
Deloitte’s Global Pillar Two Legislative Tracker can help you to stay informed about local measures implementing Pillar Two. The Tracker provides a high-level summary of Pillar Two proposals and enacted laws by jurisdiction, together with country-by-country comparisons. Further information on the tracker is available here.
On Wednesday 20 November 2024 at 12.00 GMT/13.00 CET, there will be a webcast from our global mobility and employment taxes series titled Legislative forces for change impacting global talent and mobility. Hosted by James Macpherson, our panel will discuss legislative changes affecting the talent and mobility landscape in the UK and across the European Union, including legislative reforms for non-domiciles, the need for increased transparency for pay equity, and changes to employment rights.