In representations submitted in advance of the Budget on 3 March 2021, the CIOT has urged the government to undertake consultations in relation to the taxation of property income, capital gains tax and corporation tax, to support taxpayers and businesses as the UK emerges from the pandemic and to promote recovery and growth.
On the taxation of property income, the CIOT recommends a smoother implementation of MTD for income tax self-assessment and suggests the government consults on how basis periods might be aligned for property and trading income to ease reporting burdens under MTD.
On CGT, the CIOT suggests a wider consultation on the future role and shape of CGT, including considering how to achieve the most revenue with the fewest adverse economic consequences. The CIOT considers that it would also be helpful to study the implications for CGT policy of the UK’s departure from the EU.
Recommendations on corporate tax include:
corporate tax losses: the government should allow a three-year carry back of business tax losses arising over the period of the covid-19 pandemic and consider relaxing the rules around the 50% loss relief restriction;
capital allowances: the level of the annual investment allowance should be set on a permanent basis at £1m pa, to create certainty for businesses contemplating investment and avoid arbitrary cliff edges around dates;
changes in ownership of businesses: the government should clarify what will constitute a major change in the nature or conduct of a trade carried on by a company to reflect the circumstances that have arisen as a result of covid-19;
company reorganisations: the CIOT suggests providing relief from stamp duty for all partition demergers and simplifying the rules relating to reorganisations to help businesses which may wish to reorganise or diversify, particularly as a result of changes due to covid-19; and
UK to UK transfer pricing: the CIOT considers that the UK’s departure from the EU has created an opportunity to repeal tax measures that were introduced solely to ensure that UK law complied with the then understanding of EU law; UK to UK transfer pricing is one such measure that warrants consideration for repeal.
In representations submitted in advance of the Budget on 3 March 2021, the CIOT has urged the government to undertake consultations in relation to the taxation of property income, capital gains tax and corporation tax, to support taxpayers and businesses as the UK emerges from the pandemic and to promote recovery and growth.
On the taxation of property income, the CIOT recommends a smoother implementation of MTD for income tax self-assessment and suggests the government consults on how basis periods might be aligned for property and trading income to ease reporting burdens under MTD.
On CGT, the CIOT suggests a wider consultation on the future role and shape of CGT, including considering how to achieve the most revenue with the fewest adverse economic consequences. The CIOT considers that it would also be helpful to study the implications for CGT policy of the UK’s departure from the EU.
Recommendations on corporate tax include:
corporate tax losses: the government should allow a three-year carry back of business tax losses arising over the period of the covid-19 pandemic and consider relaxing the rules around the 50% loss relief restriction;
capital allowances: the level of the annual investment allowance should be set on a permanent basis at £1m pa, to create certainty for businesses contemplating investment and avoid arbitrary cliff edges around dates;
changes in ownership of businesses: the government should clarify what will constitute a major change in the nature or conduct of a trade carried on by a company to reflect the circumstances that have arisen as a result of covid-19;
company reorganisations: the CIOT suggests providing relief from stamp duty for all partition demergers and simplifying the rules relating to reorganisations to help businesses which may wish to reorganise or diversify, particularly as a result of changes due to covid-19; and
UK to UK transfer pricing: the CIOT considers that the UK’s departure from the EU has created an opportunity to repeal tax measures that were introduced solely to ensure that UK law complied with the then understanding of EU law; UK to UK transfer pricing is one such measure that warrants consideration for repeal.
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