Business Tax Briefing

Finance Bill and National Insurance Contributions (Reduction in Rates) Bill updates

The Finance Bill, published in November to enact several of the Autumn Statement’s tax announcements, was given its Second Reading in the House of Commons on 13 December 2023. The Bill’s next Commons stage, consideration by a Committee of the Whole House, is scheduled for 10 January 2024.

The National Insurance Contributions (Reduction in Rates) Bill, which will separately enact the Autumn Statement’s key national insurance announcements, including the reduction in the 12% Class 1 employee NIC rate to 10% from 6 January 2024, completed its remaining House of Lords stages on 12 December 2023 without amendment. This Bill is now awaiting Royal Assent, which is expected to occur next week.

Scottish and Welsh Budgets to be presented next week

On Tuesday 19 December 2023, the Scottish Budget for 2024-25 is due to be published, setting out the Scottish government’s plans for Scottish devolved income tax from 6 April 2024, along with any changes to Land and Buildings Transaction Tax, Scottish Landfill Tax and business rates. The Scottish parliament can introduce and vary income tax rates and income tax bands applicable to the non-savings, non-dividend income of Scottish-resident taxpayers.

Also on Tuesday, the Welsh government is due to publish its draft Budget for 2024-25. This will contain the Welsh government’s proposals for Welsh devolved income tax rates from 6 April 2024, along with any proposed changes to Land Transaction Tax, Landfill Disposals Tax and business rates. The Senedd cannot vary income tax bands from those applicable in England and Northern Ireland, but it is able to vary the basic, higher and/or additional income tax rates applicable to the non-savings, non-dividend income of Welsh-resident taxpayers.

New guidance on the use of Artificial Intelligence in the Courts and Tribunals

On 12 December 2023, the Courts and Tribunals Judiciary published new guidance to assist judicial office holders in relation to the use of Artificial Intelligence (AI) in the courts and tribunals system. The Judiciary notes that the use of AI throughout society continues to increase, and so does its relevance to the courts and tribunals. The guidance highlights a number of key risks and issues associated with AI’s increased use. These include the risk that unrepresented litigants may use AI chatbots as their only source of assistance, and such litigants may not be aware that they are prone to error and may not be able to independently verify the accuracy of the information provided by AI. A recent decision of the First-tier Tribunal, where a number of citations and summaries of plausible-sounding supporting case law precedent had been “hallucinated” by an AI large language model, considered some of these issues in practice.  

VAT treatment of fund management services – response to consultation

In December 2022, the government published a technical consultation on the VAT treatment of fund management services. The consultation was part of a broader tax and regulatory review of the UK’s funds regime, and proposed reform of the VAT legislation to codify policy. The government has now published a summary of responses to the consultation. The summary reports that the government will retain the current list of fund types to which the fund management exemption applies. Respondents submitted that defining the term ‘management’ could provide greater clarity on the application of the exemption. However, the “government has concluded that the current position established by settled case-law provides sufficient legal certainty.” In response to the request for more definition, the government will “take this forward as part of the review of current guidance”, with work focussing on providing clarity to the existing legal position, and not widening the definition. (Contact: Alex Beattie)

EMEA Dbriefs webcasts

The EMEA Dbriefs programme is taking a brief break now for the holiday period. If you want to be informed about upcoming webcasts throughout 2024, please subscribe to receive our bi-weekly mailing. In the meantime, you can catch up on demand with any recent webcasts you may have missed, including the UK Tax Monthly Update December; Interview With Manuel de los Santos, Head of OECD Transfer Pricing Unit; Global Mobility and Digital Transformation; Upcoming Changes To Holiday Entitlement And Holiday Pay; and The Future Of Reward.

Deloitte Business Tax Briefing is taking a break for the next two weeks. The next edition will be published on Friday 5 January 2024.