22 March 2024
National Insurance Contributions Act – Royal Assent
The National Insurance Contributions (Reduction in Rates) Act 2024 completed its remaining Lords stages earlier this week and received Royal Assent on 20 March 2024. No amendments were made during the Act’s passage through Parliament. The Act legislates for the Spring Budget’s Class 1 employee NICs and Class 4 self-employed NICs rate cut announcements that will take effect from 6 April 2024. The text of the Act has been published here.
Government launches further consultation on UK Carbon Border Adjustment Mechanism
On 21 March 2024, HM Treasury and HMRC opened a new joint consultation on the design and administration of the future UK carbon border adjustment mechanism (CBAM). This follows on from the government’s announcement of 18 December 2023 that it intends to introduce a UK CBAM, to take effect from 1 January 2027, that would apply a charge on importers based on the emissions embodied in imports of certain carbon-intensive goods in seven sectors: iron and steel; aluminium; cement; ceramics; fertilisers; glass; and hydrogen. The consultation sets out how the government proposes to structure the UK CBAM and includes questions on determining which goods are in scope, how CBAM liabilities will be calculated, how the applicable CBAM rate for each of the sectors will be determined, and how the rules will be administered. The consultation is open until 13 June 2024. The government is also inviting stakeholders interested in participating in roundtable discussions on the proposals and/or who would like to be added to its CBAM mailing list, to contact it at cbampolicyteam@hmrc.gov.uk.
R&D-intensive loss-making small and medium enterprises – Northern Ireland regulations
HM Treasury has published regulations – The Research and Development (Chapter 2 Relief) Regulations 2024 (SI 2024/348) – that amend how the new ‘enhanced R&D intensive support’ (ERIS) rules for loss-making R&D-intensive SMEs (Chapter 2, Part 13, CTA 2009) will apply to certain Northern Ireland companies. Under the new regulations, applicable from 1 April 2024, any benefit of the ERIS rules in excess of the amount that could have been claimed under the alternative merged R&D expenditure credit (RDEC) rules will be limited to £250,000 over a rolling three-year period. This is accompanied by a relaxation of the normal rule that can restrict R&D relief for contracted-out R&D and externally-provided workers where work is undertaken overseas. The regulations apply to companies with a registered office in Northern Ireland claiming under the ERIS rules that either trade in goods or are involved in electricity-related activities. Other Northern Ireland-based companies can opt out of the regulations and apply the rules in the same way as companies in the rest of the UK. HMRC have published a supporting guidance page with further details.
Investment zones and Green Freeport tax site regulations published
HM Treasury has published new investment zone regulations to designate seven areas, located within the West Midlands, North East, and Liverpool City Region Investment Zones, as special tax sites with effect from 8 April 2024. The designation will allow for special rates of structures and buildings allowances, plant and machinery capital allowances, stamp duty land tax, and Class 1 employer NICs to apply to qualifying activities in these sites. Maps of these investment zones and their tax sites have been published by HMRC here.
HM Treasury has also published the regulations to designate, with effect from 8 April 2024, five tax sites with similar reliefs within Scotland’s first Green Freeport at Inverness and Cromarty Firth. The corresponding map has been published by HMRC.
EMEA Dbriefs webcasts
The next EMEA Dbriefs Tax webcast is on Wednesday 27 March 2024 at 14.30 GMT/15.30 CET. OECD Pillar One: Amount B Transfer Pricing Baseline Distribution Return is from our International Tax series and will be presented by Alison Lobb, Bob Stack and Alexander Duric. Our panel will discuss the G20/OECD Inclusive Framework’s new simplified ‘Amount B’ approach for transfer pricing the returns for routine, low risk distributors under the arm’s length principle. This new approach will apply from 1 January 2025 in countries that opt to apply it, and all groups (regardless of size) that undertake wholesale distribution of goods will have to consider the rules.
And if you missed it, in late 2023, Deloitte’s Alison Lobb and Ralf Heussner met with Manuel de los Santos, Head of the Transfer Pricing Unit at the OECD’s Centre for Tax Policy and Administration, to discuss latest and upcoming OECD transfer pricing projects. In addition to the Amount B rules, topics discussed included: Amount A of Pillar One; transfer pricing aspects of the Pillar Two global minimum tax rules; upcoming projects, including on cross-border remote working, permanent establishments, and intra-group services; and dispute prevention and resolution mechanisms. The recording is available to watch here.