The Finance Bill 2022-2023 draft legislation and policy papers have been released by the UK government. This draft legislation Finance Bill indicates what to expect with possible changes to renewing annual taxes, delivering new tax proposals and maintaining administration of the tax system.
We take a look at just some of the key changes coming in*:
(*It is worth noting, the final contents of Finance Bill 2022-23 will be subject to confirmation at the Budget 2022)
New measures include a top-up scheme for lower-paid workers who are contributing to their workplace pensions under net-pay arrangements and are at a tax disadvantage. Some 1.2 million workers are affected, and they are being asked to wait two years for the start of correction to receive a tax refund. Even then the top-up will not be back dated. Well done to the Low-Income Tax Reform Group (LITRG) for putting so much work into backing this change.
Another key measure in the Finance Bill 2022-2023 benefits wealthy divorcing couples who may soon be substantially better off due to the government’s plans to make a relaxation in the Capital Gains Tax (CGT) rules, which will extend the no gain/no loss disposal rules on separation by three years, or indefinitely if under a court settlement.
New HMRC research on crypto-asset ownership published this week in the Finance Bill reveals from those surveyed, that most ‘investors’ are likely to be young and mainly male. Like one or two others it is possible that blockchain technology has created a massive shadow banking system, and there is also not much difference between a new crypto-asset launch and a Ponzi scheme. Food for thought?
Annual Tax on Dwellings
The Finance Bill also covers temporary reliefs from the Annual Tax on Enveloped Dwellings (ATED) charge and the 15% Stamp Duty Land Tax (SDLT) rate. Where a dwelling is made available under the Homes for Ukraine Sponsorship Scheme. This also deals with making payments by the government to those taking in refugees tax-free.
The scheme was introduced in March 2022 and allows people living in the UK to sponsor a named Ukrainian national or family to come to live in the UK with them, providing they have suitable accommodation to offer.
- The annual ATED charge applies to residential properties (dwellings) valued over £500,000 which are owned by non-natural persons such as companies and which are not either let commercially or used in a property trade.
- The 15% SDLT charge applies where non-natural persons acquire dwellings for more than £500,000 which are not used for property rental businesses, farmhouses, or property made available to the public or occupied by employees.
The new rules will ensure that:
- Those non-natural persons who qualify for existing reliefs from the ATED charge and exemption from the 15% rate of SDLT can continue to claim those reliefs and exemptions while their properties are being used to house Ukrainians under the scheme.
- Properties that do not currently qualify for relief from ATED will be entitled to relief from the date of actual occupation of the dwelling by refugees under the scheme.
- Dwellings purchased for a purpose that would otherwise be a relievable purpose will qualify for relief from the 15% rate of SDLT where the intention is that the property will be temporarily available to refugees under the scheme.
The ATED relief takes effect from 1 April 2022 and the SDLT relief for transactions with an effective date on or after 31 March 2022.
In addition, the draft legislation provides that individuals, companies and other organisations who sponsor Ukrainian refugees under the scheme and receive a ‘Thank you’ payment from the government, will not have to pay income or Corporation Tax on those payments.
- ‘Thank you’ payments are currently capped at £350 per month for up to 12 months.
- The tax exemption is retrospective to 14 March 2022.
HMRC has published its accounts for 2021-22 together with a lot of other data. The tax gap is still hovering around 5%, which is about £32 billion and its income from compliance operations (i.e investigations) is slightly more than that, coming in at a cost of something just over £2 million. The net result is that HMRC’s compliance operations are good value for money for taxpayers compared with say, whatever department it was that spent an estimated £37 billion on the not-fit-for-purpose ‘track and trace’ app.