15 November 2024
Autumn Budget 2024 and subsequent Parliamentary Bills
The Chancellor of the Exchequer Rachel Reeves MP delivered her Autumn Budget on 30 October 2024. Analysis of the tax announcements can be found on our dedicated Budget website here, including our commentary on individual measures. A recording of our Dbriefs webcast on the Budget is available to watch on demand here.
HMRC’s overview of the tax legislation and rates (OOTLAR), which lists the tax policy measures announced, generally shows how and when they will be legislated, and includes links to relevant tax information and impact notes is here.
The text of Finance Bill 2024-25 was published on 7 November 2024, together with its Explanatory Notes. The Bill’s dedicated pages on Parliament’s website are here. The Bill had its First Reading in the House of Commons on 6 November 2024 following the conclusion of MPs’ four-day debate on the Autumn Budget and their approval of the Budget’s Ways and Means Resolutions.
Separately, the National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-25 and the Non-Domestic Rating (Multipliers and Private Schools) Bill have been published and had their First Readings on 13 November 2024.
New Romania-UK double tax treaty signed
The governments of the UK and Romania announced the signing of a new double taxation agreement and protocol on 13 November 2024. The English language version of the text has been published by HMRC here. The new agreement and protocol, which are not yet in force, will introduce a number of changes compared to the current double tax treaty. These include reductions in the maximum treaty withholding tax rates (in certain cases to 0%) on cross-border payments of dividends, interest and royalties provided, amongst other things, the conditions set out in Articles 11, 12 and 13 respectively are met. The new agreement and protocol will enter into force and effect, in accordance with the timings in Article 28, only once both countries have completed their domestic parliamentary procedures for ratification and have notified each other accordingly.
Changes to HMRC interest rates following Bank of England rate change
On 7 November 2024, the Bank of England’s Monetary Policy Committee announced a decrease in the official Bank Rate by 0.25 percentage points from 5% to 4.75%. HMRC have issued a press release setting out the automatic 0.25 point decrease to interest rates for late tax payments and tax repayments as a result. The new rates take effect from 18 November 2024 for quarterly instalment payments of corporation tax, and from 26 November 2024 for most other tax payments. HMRC will shortly update their interest rate tables accordingly.
Tribunal dismisses taxpayer’s appeal on loan relationships ‘unallowable purpose’ rule
The First-tier Tribunal has dismissed a taxpayer’s appeal in the corporation tax case Syngenta Holdings Limited v HMRC concerning the loan relationships unallowable purpose rule (sections 441 and 442 Corporation Tax Act 2009). The taxpayer, a UK-resident group company, claimed tax deductions between 2011 and 2016 for interest expense arising on a new intra-group loan from an overseas group treasury company. The loan had partly-funded an intra-group acquisition in 2011 under which the taxpayer acquired 100% of the shares in another UK company from its non-UK parent company. HMRC considered that the main purpose the taxpayer was a party to the loan for was an unallowable purpose – i.e. the obtaining of the UK tax deductions for the interest. After reviewing the evidence in detail, including documentary evidence from the time the transaction was implemented, and applying recent case law on the unallowable purpose rule, the First-tier Tribunal made a finding of fact that the only reason the loan was entered into was to secure the tax advantage. Accordingly, all the interest debits were disallowed.
HMRC publish guidance on Patent Box and Employment Allowance ‘connected entity’ rules
On 7 November 2024, HMRC published two new sets of guidance documents as part of their series of Guidelines for Compliance (GfC). GfCs offer HMRC’s views on complex, widely misunderstood or novel risks that can occur across tax regimes:
· Help with Patent Box computations – GfC9 relates to corporation tax’s Patent Box rules, and describes a number of common errors that HMRC have observed in companies’ Patent Box computations. It sets out recommended approaches for business to consider to reduce the risk of such errors occurring in their Patent Box calculations, together with best practice recommendations on supporting information to include with submitted tax returns and HMRC’s recommended approach to record keeping.
· Help with the Apprenticeship Levy and Employment Allowance – connected entities – GfC10 discusses the £15,000 annual allowance for Apprenticeship Levy liabilities, and the £5,000 annual Employment Allowance for Class 1 Secondary National Insurance Contributions (increasing to £10,500 from 2025-26) available to certain employers, and restrictions and additional considerations that can apply where an employer is ‘connected’ to other entities. Separate parts of the guidance are provided focussing on common errors from the application of the connected entity rules to companies, public bodies, and charities respectively.
Hungary – 31 December 2024 Pillar Two registration deadline
Like many countries worldwide, Hungary has adopted legislation to implement the OECD Inclusive Framework’s Pillar Two global minimum tax rules with effect from 2024. The Hungarian law currently includes a registration requirement that may require in-scope groups with calendar year-ends to complete an initial Pillar Two registration with the local tax authorities by 31 December 2024. The related registration form, confirming the information required, has not yet been published. Please contact your local Deloitte Hungary contact for further information.
Deloitte’s Global Pillar Two Legislative Tracker can help you to stay informed about local measures implementing Pillar Two. The Tracker provides a high-level summary of Pillar Two proposals and enacted laws by jurisdiction, together with country-by-country comparisons. Further information on the tracker is available here.
VAT in the Digital Age – ECOFIN reaches agreement
On 5 November 2024, the EU’s Economic and Financial Affairs Council (ECOFIN) reached agreement on the EU’s VAT in the Digital Age (ViDA) package. The ViDA package is intended to update the EU VAT system to take account of technological advances, address the challenges of the digital economy, and be more resilient against VAT fraud. The ViDA package includes three pillars. Firstly, digital reporting requirements, with new rules for digital reporting based on electronic invoicing. Secondly, a new VAT regime for platform economy operators in the short-term accommodation and passenger transport sectors, who will be responsible for collecting and remitting VAT (the ‘deemed supplier’ model). And thirdly, single VAT registration, to reduce the need for taxpayers to VAT register in each EU member state in which they do business. For more information on the package, see Deloitte tax@hand.
EMEA Dbriefs webcasts
We have a number of Dbriefs webcasts over the next month, including: Legislative forces for change impacting global talent and mobility (20 November); Unleashing the value of employee benefits (27 November); Digitalisation of supply chains (28 November); Pillar Two and M&A (3 December); E‑invoicing (5 December); Navigating the global talent landscape – the payroll perspective (10 December) and Unlocking talent in a boundaryless world (11 December). For more information, and to view recent webcasts on demand, please visit our Dbriefs website.