14 March 2025
Spring Forecast: 26 March 2025
A reminder that the Office for Budget Responsibility (OBR) will publish its next economic and fiscal forecast on Wednesday 26 March 2025. The Chancellor of the Exchequer, Rachel Reeves, will respond with a parliamentary statement on the same day. For insights on any taxation announcements made on the day, visit our dedicated webpage. There will be an EMEA Dbriefs webcast on Thursday 27 March 2025 at 15.00 GMT/16.00 CET on the forecast. In the meantime, our Deloitte TaxScape article summarises some of the currently known UK tax changes coming into force throughout 2025.
Finance Bill update
The remaining Commons stages of Finance Bill 2024-25, the Finance Bill introduced following Autumn Budget 2024, took place on 3 March 2025. During the Report Stage debate, the only amendments accepted were 66 amendments tabled by the government (see here for details). MPs then voted to give the Finance Bill its Third Reading.
The Bill has now moved to the House of Lords where it had its First Reading on 4 March 2025. The Lords’ version of the Finance Bill, reflecting all amendments made during the Bill’s passage through the House of Commons, has been published. This will effectively be the text of Finance Act 2025, as the Lords cannot change the Bill. Remaining Lords stages are scheduled for 19 March 2025, after which the Bill will be sent for Royal Assent.
Business rates forward look
On 17 February 2025, HM Treasury published a policy paper, Business rates: forward look, intended to give an overview of the expected timelines for reforms to the non-domestic rates system in England and government plans for stakeholder engagement. The paper summarises key announcements made at Autumn Budget 2024, including the intention to introduce, from 1 April 2026, two lower multipliers for Retail, Hospitality and Leisure properties with rateable values below £500,000, and a higher multiplier for all properties with rateable values of £500,000 and above. These reforms will take place alongside a routine revaluation, and the government will announce the multiplier rates and reliefs for 2026-27 at Budget 2025 in the autumn.
The paper also provides an update on the government’s Autumn Budget 2024 discussion paper Transforming business rates, that set out the government’s priority areas for further reform and invited industry to help co-design “a fairer business rates system that supports investment and is fit for the 21st century”. Stakeholder representations received so far will be considered when developing options for reform, and further stakeholder engagement will be targeted to develop specific reform options during Q2 and Q3 2025, ahead of announcements in Budget 2025.
UK and Andorra sign first Double Tax Convention
The governments of the UK and Andorra announced the signing of the Andorra-UK Double Taxation Convention on 20 February 2025. This will be the first double tax treaty between the two countries. Subject to conditions, the treaty will inter alia provide for 0% rates of withholding tax on cross-border payments of royalties, interest, and dividends.
The Convention will enter into force only once both countries complete their domestic parliamentary procedures for ratification and notify each other accordingly. Individual articles will then take effect in the UK and Andorra in accordance with the timings set out in Article 28 of the Convention.
OECD publishes consolidated report on Amount B
On 24 February 2025, the OECD published a Consolidated Report on Amount B. Amount B is a new approach for transfer pricing baseline marketing and distribution activities that seeks to streamline and simplify the application of the arm’s length principle. All businesses, regardless of size, are potentially within the scope of Amount B if they carry out suitable distribution activities, and countries can adopt Amount B from 1 January 2025.
The consolidated report incorporates relevant materials on Amount B published by the OECD/G20 Inclusive Framework on BEPS in 2024. These include: the original Amount B report published in February 2024; the additional guidance on ‘covered jurisdictions’ and ‘qualifying jurisdictions’ published in June 2024; and the Amount B model competent authority agreement published in September 2024. According to the report’s introduction, “[the] content of the original publications has not been amended or modified; the Consolidated Report on Amount B simply replicates the original content for ease of reference.”
Advisory fuel rates
On 24 February 2025, HMRC published the new advisory fuel rates for company cars applicable from 1 March 2025. The previous mileage rates, effective from 1 December 2024, can be used for up to one month from the date the new rates apply. The rates for petrol engines sized 1401cc to 2000cc, and for diesel engines sized 1600cc or less, have both increased by 1 pence per mile. Rates for all other petrol and diesel engine sizes, liquefied petroleum gas (LPG) engine rates, and the advisory rate for fully-electric cars, are unchanged from the previous quarter.
Hastings Insurance Services Limited: Broking services supplied to a Gibraltar insurer
The First Tier Tribunal (FTT) has found in favour of Hastings Insurance Services Limited (Hastings) in a case involving the supply of insurance broking services to Advantage Insurance Company Limited (Advantage), a Gibraltar (non-EU) provider of insurance to UK policyholders. Although under EU and UK law, insurance transactions, including broking services, are VAT exempt, Article 169(c) of the EU Principal VAT Directive (PVD) allows input tax recovery if the services are provided to a customer outside the EU. This is implemented in the UK by way of the Value Added Tax (Input Tax) (Specified Supplies) Order 1999, but the order was amended in 2019 so that UK insurance intermediaries were entitled to recover VAT only where the party insured was based outside the UK. Hastings submitted a claim to HMRC for the recovery of input tax attributable to supplies made to Advantage relating to both pre- and post-Brexit periods, on the basis that the 2019 amendment was incompatible with the PVD. The claim was disallowed by HMRC.
The FTT held that “customer” in Article 169(c) should be understood as referring to Hastings’ customer, Advantage, and not the final customer, the UK policyholder (as was argued by HMRC). The FTT also found that Article 169(c) is unconditional and sufficiently precise so as to have direct effect, and therefore for the pre-Brexit period, Article 169(c) can be relied on to allow input tax recovery. With respect to the post-Brexit period, under Section 4 of the EU (Withdrawal) Act 2018, directly effective rights arising under an EU Directive and recognised and enforced before 31 December 2020 continued to be recognised and enforced in UK law, if they are “of a kind” recognised by the European Court or any UK court or tribunal in a case decided before 31 December 2020. The FTT held that EU case law provided that Article 169 had direct effect, or alternatively, that Article 169 was “of a kind” and/or had a “close relationship” with Article 168, which had previously been held to have direct effect.
EMEA Dbriefs tax webcasts
We have four Dbriefs webcasts over the next month: Corporate Criminal Offence and the Failure to Prevent Fraud (20 March); Update on latest Pillar Two developments (25 March); Post UK Spring Statement and OBR Forecast briefing (27 March); and Tariffs: what are the tax and legal implications for your supply chain? (2 April). Please visit our Dbriefs website for more information, and to view any other recent webcasts on demand.