15/12/2023
Autumn Statement
The Chancellor of the Exchequer, Jeremy Hunt MP, delivered his Autumn Statement on 22 November 2023. Analysis of the tax announcements can be found on our dedicated Autumn Statement website here, including our commentary on individual measures. A recording of our Dbriefs webcast on the Autumn Statement is available to watch here. Key measures announced included:
Autumn Finance Bill
A Finance Bill, to enact those tax measures in Autumn Statement documents listed by HM Treasury as included in ‘Autumn Finance Bill 2023’, was published on 29 November 2023, alongside its explanatory notes. The Bill was given its Second Reading in the House of Commons on 13 December 2023. The Bill’s Committee stages are scheduled for January 2024.
National Insurance Contributions (Reduction in Rates) Bill
A National Insurance Contributions (Reduction in Rates) Bill has been introduced to separately enact the Autumn Statement’s key NICs rate changes above. The Bill and its explanatory notes were published on 23 November 2023, and the government asked Parliament to expedite the progress of the Bill in order to give time for employers to implement changes to payroll software ahead of 6 January 2024 Class 1 employee rate change. The Bill has completed all its Commons and Lords stages, without amendment, and is awaiting Royal Assent, which is expected next week.
HMRC publish guidance on reporting rules for digital platforms
HMRC have published new guidance, contained within their International Exchange of Information Manual (IEIM), concerning the UK’s implementation of the OECD’s model reporting rules for digital platforms. The rules will require in-scope UK digital platforms to collect, and report to HMRC annually, information on the income of sellers using their platforms to provide personal services, sell tangible goods, and rent out immoveable property or transport. The UK rules will apply with effect from 1 January 2024, with the first reporting of data in January 2025. Similar rules are being implemented by EU member states with effect from 1 January 2023 (with the first reporting of data in January 2024) under the Directive on Administrative Cooperation (DAC7), and so, where relevant, UK-based platforms within the scope of EU rules will need to consider their reporting obligations for 2023.
HMRC publish new Guidelines for Compliance with IR35 off-payroll working rules
HMRC have published a new set of guidance pages Help to comply with the reformed off-payroll working rules (IR35) — GfC4. The guidance is the fourth set of guidelines published under HMRC’s new Guidelines for Compliance (GfC) programme, which sets out HMRC’s views on a number of complex or widely misunderstood UK tax risks. HMRC state that the GfC4 guidelines, which are broken down into 14 separate parts, are aimed primarily at businesses responsible for operating the off-payroll working rules (IR35) and that engage workers who provide their services through their own intermediaries. They are designed to help such organisations understand what HMRC consider good practice and contain examples of what HMRC considers to be good systems and processes for compliance with the IR35 rules. HMRC stress that the new guidelines should be read alongside existing HMRC off-payroll working guidance and that they are not designed to be used in isolation, or to create an end-to-end process for organisations to comply with the rules.
Company car advisory fuel rates from 1 December 2023
HMRC have announced the new advisory fuel rates for company cars applicable for the three months from 1 December 2023. The previous mileage rates, effective from 1 September 2023, can be used for up to one month from the date the new rates apply. Compared to the previous rates, the advisory fuel rates for diesel have each increased by 1p. The advisory fuel rates for petrol engines sized 1,041 to 2,000cc are unchanged, but petrol rates for smaller and larger engines have increased by 1p. Rates for liquefied petroleum gas (LPG) are reduced by 1p for engines over 2,000cc and unchanged for smaller engine sizes. The advisory rate for fully electric cars has decreased by 1p to 9p per mile.
New UK double tax treaties with Luxembourg and San Marino enter into force
The UK-Luxembourg double taxation treaty and protocol, signed on 7 June 2022, entered into force on 22 November 2023 following ratification by both countries. According to HMRC, the main articles of the treaty and protocol take effect: from 1 January 2024 for UK and Luxembourg withholding taxes (to income derived on or after 1 January 2024) and for other Luxembourg taxes on income or capital; from 1 April 2024 for UK corporation tax purposes (including UK corporation tax on chargeable gains); and from 6 April 2024 for UK income tax and capital gains tax purposes.
The UK government has also confirmed that the UK-San Marino double taxation treaty, signed on 17 May 2023, entered into force on 30 November 2023. This is the first comprehensive double tax treaty between the United Kingdom and San Marino. According to HMRC, the treaty takes effect: from 1 January 2024 for San Marino taxes and for UK withholding taxes; from 1 April 2024 for UK corporation tax purposes; and from 6 April 2024 for UK income tax and capital gains tax purposes.
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.
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.