13 December 2024
Finance Bill 2024-25, the Finance Bill introduced to enact many of the Autumn Budget’s tax announcements, had its Second Reading debate in the House of Commons on 27 November 2024. MPs agreed to give the Bill its Second Reading by a vote of 332 to 176.
The Bill’s provisions on capital gains tax rates and reliefs, oil and gas taxation, VAT on private school fees, and stamp duty land tax 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. 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.
The National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-25 will implement, with effect from 6 April 2025, several NIC announcements made in the Autumn Budget including the decrease in the employer secondary Class 1 NICs threshold to £5,000 per year and the increase in the employer secondary Class 1 NICs rate from 13.8% to 15%. The Bill had its Second Reading debate in the House of Commons on 3 December 2024. The government has scheduled the Bill’s remaining Commons stages for 17 December 2024.
The Non-Domestic Rating (Multipliers and Private Schools) Bill will implement certain business rates measures 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. This Bill had its Second Reading on 25 November 2024 and its Committee stages began on 11 December 2024.
On 4 December 2024, the Scottish government presented its proposed Budget for the 2025-26 tax year. On the devolved elements of Scottish income tax applicable to the non-savings, non-dividend income of Scottish-resident taxpayers, the same six rates of income tax ranging from 19% to 48%, as applicable in 2024-25, are proposed for 2025-26. Increases to bands for some of the lower rates are proposed, whilst maintaining the current thresholds for paying the Higher, Advanced and Top rates - further details are available here. The Scottish government announced an increase from 6% to 8%, generally effective from 5 December 2024, for the land and buildings transaction tax (LBTT) Additional Dwelling Supplement (ADS) applicable to certain purchases of second residential properties.
Then, on 10 December 2024, the Welsh government presented its proposed Budget for 2025-26. As in previous years, the government proposes to keep the devolved rates of income tax 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 homes.
The Upper Tribunal has dismissed an appeal by a taxpayer in the stamp duty land tax (SDLT) case The Tower One St George Wharf Limited. The case relates to a series of transactions for the transfer of the freehold of a residential property from one group company to another. Although there were commercial reasons for the transfer to a separate legal entity, the group also (incorrectly) understood that a corporation tax advantage, namely a tax-free step-up in the building’s base cost, could be obtained if the transfer was implemented in a certain way. This included additional steps of granting a lease to a third group company, and the subsequent transfer of that lease. Group relief from SDLT (under Schedule 7 Finance Act 2003) on the lease transfer was claimed, but HMRC refused on the basis that a restriction applied as the transfer formed “part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of liability to tax”.
The Upper Tribunal held that the fact that the intended corporation tax result did not ultimately arise did not prevent the arrangements from being regarded as having a tax avoidance purpose. Nor was it relevant that any (intended) step-up in base cost would not have resulted in an immediate saving of corporation tax. Applying recent case law on the similarly-worded corporation tax loan relationships ‘unallowable purpose rule’ (section 441 Corporation Tax Act 2009), the Upper Tribunal agreed that the main purpose test was met and so SDLT was payable.
HMRC have published the new advisory fuel rates for company cars applicable from 1 December 2024. The previous mileage rates, effective from 1 September 2024, can be used for up to one month from the date the new rates applied. Compared to the previous rates, each of the advisory fuel rates for petrol and diesel engines have decreased by 1p. The rates for cars with liquefied petroleum gas (LPG) engines, and the advisory electricity rate for fully-electric cars, are unchanged from the previous quarter.
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).
The government has announced the introduction of a statutory levy on gambling operators. Publishing its response to the consultation on the levy, which ran from October to December 2023, the government states that the “levy will be paid by operators and collected and administered by the Gambling Commission under the strategic direction of the Government”. The levy will be charged at a set rate for holders of Gambling Commission operating licences, depending on the sector and nature of the gambling activity. The rate will range from 1.1% (for online operators) to 0.1% of Gross Gambling Yield. Regulations will be laid before Parliament shortly, and it is intended that the levy will come into force on 6 April 2025.
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.