On 12 November 2020, HMRC published further draft legislation for Finance Bill 2021. Consultation on the draft clauses will run until 7 January 2021. Finance Bill 2021 is expected to be introduced to Parliament in spring 2021, shortly after a spring Budget, with FA 2021 expected to receive royal assent in summer 2021.
The draft provisions together with accompanying explanatory notes, consultation responses and other supporting documentation, cover the following.
MTD for corporation tax: the government is consulting on the design of MTD for corporation tax. Proposals include applying MTD to all entities within the charge to corporation tax (including non-resident companies) and set out record-keeping and reporting requirements, and potential exceptions from MTD. The Government intends to introduce a voluntary pilot from April 2024, with mandatory adoption from 2026 at the earliest. The consultation closes on 5 March 2021.
Annual investment allowance: the £1m AIA will be extended until 1 January 2022 (rather than reverting back to £200,000 at the end of 2020).
Off-payroll working rules: the definition of intermediary will be narrowed to bring it back within the intended scope of the policy. This follows HMRC’s recent clarification around company intermediaries. The measure will apply from 6 April 2021.
Promoters of tax avoidance: the government intends to consult in spring 2021 on further measures aimed at promoters of tax avoidance, including making UK ‘partners’ of offshore promoters responsible for those promoters’ anti-avoidance penalties.
Notification of uncertain tax treatment by large businesses: implementation of the requirement for large businesses to notify HMRC of uncertain tax treatments will be delayed until April 2022.
R&D tax relief for SMEs: the amount of payable SME R&D tax credit which a company can claim in a period will be capped at £20,000 plus 300% of its total liability for PAYE and NICs for the period, with measures aimed to minimise the impact on genuine businesses. The changes will have effect for accounting periods beginning on or after 1 April 2021.
Hybrid rules for corporation tax: a number of changes will be made to the hybrid and other mismatches regime, with a number of relieving amendments to have effect retrospectively from 1 January 2017.
Withdrawal of LIBOR: references to LIBOR in the leasing rules in both CAA 2001 and CTA 2010 will be replaced with references to ‘incremental borrowing rate’, and a power to introduce secondary legislation to address any unforeseen tax issues arising from the transition away from LIBOR will also be included. The changes will apply broadly from 1 January 2022.
Raising standards in the tax advice market: the government proposes a number of steps to improve standards, including raising awareness of HMRC’s ‘standard for agents’, consulting on the requirement for all tax advisers to hold professional indemnity insurance, and continuing to work with the professional bodies to understand the role they play in supervising and supporting their members and raising standards in the profession.
Plastic packaging tax: draft legislation sets out the main features of the new tax including the scope of the tax, the registration threshold and rate of tax, and details of registration, payment, enforcement and exceptions.
On 12 November 2020, HMRC published further draft legislation for Finance Bill 2021. Consultation on the draft clauses will run until 7 January 2021. Finance Bill 2021 is expected to be introduced to Parliament in spring 2021, shortly after a spring Budget, with FA 2021 expected to receive royal assent in summer 2021.
The draft provisions together with accompanying explanatory notes, consultation responses and other supporting documentation, cover the following.
MTD for corporation tax: the government is consulting on the design of MTD for corporation tax. Proposals include applying MTD to all entities within the charge to corporation tax (including non-resident companies) and set out record-keeping and reporting requirements, and potential exceptions from MTD. The Government intends to introduce a voluntary pilot from April 2024, with mandatory adoption from 2026 at the earliest. The consultation closes on 5 March 2021.
Annual investment allowance: the £1m AIA will be extended until 1 January 2022 (rather than reverting back to £200,000 at the end of 2020).
Off-payroll working rules: the definition of intermediary will be narrowed to bring it back within the intended scope of the policy. This follows HMRC’s recent clarification around company intermediaries. The measure will apply from 6 April 2021.
Promoters of tax avoidance: the government intends to consult in spring 2021 on further measures aimed at promoters of tax avoidance, including making UK ‘partners’ of offshore promoters responsible for those promoters’ anti-avoidance penalties.
Notification of uncertain tax treatment by large businesses: implementation of the requirement for large businesses to notify HMRC of uncertain tax treatments will be delayed until April 2022.
R&D tax relief for SMEs: the amount of payable SME R&D tax credit which a company can claim in a period will be capped at £20,000 plus 300% of its total liability for PAYE and NICs for the period, with measures aimed to minimise the impact on genuine businesses. The changes will have effect for accounting periods beginning on or after 1 April 2021.
Hybrid rules for corporation tax: a number of changes will be made to the hybrid and other mismatches regime, with a number of relieving amendments to have effect retrospectively from 1 January 2017.
Withdrawal of LIBOR: references to LIBOR in the leasing rules in both CAA 2001 and CTA 2010 will be replaced with references to ‘incremental borrowing rate’, and a power to introduce secondary legislation to address any unforeseen tax issues arising from the transition away from LIBOR will also be included. The changes will apply broadly from 1 January 2022.
Raising standards in the tax advice market: the government proposes a number of steps to improve standards, including raising awareness of HMRC’s ‘standard for agents’, consulting on the requirement for all tax advisers to hold professional indemnity insurance, and continuing to work with the professional bodies to understand the role they play in supervising and supporting their members and raising standards in the profession.
Plastic packaging tax: draft legislation sets out the main features of the new tax including the scope of the tax, the registration threshold and rate of tax, and details of registration, payment, enforcement and exceptions.
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