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Spring Budget 2023: some thoughtful tinkering

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The Budget was a little on the boring side, but perhaps that is only because all the main policies had already been trailed? Not that anybody should be complaining – nobody becomes a tax adviser because they are of the view that if you're not living life on the edge, you're taking up too much room.

The most interesting announcements related to encouraging investment. Aside from the headline-grabbing policies relating to capital allowances and the new investment zones, there was also some thoughtful tinkering with existing tax rules. First, the proposal to relax and streamline certain aspects of the REIT regime, hot on the heels of other recent amendments, should help to enhance the attractiveness of UK REITs for real estate investment. Second, there were also a number of changes to the recently-introduced QAHC regime – some of them retrospective – designed to ensure it is more widely available. Quite apart from the detail, one gets a sense that this reflects the government's commitment to the regime. Finally, the proposed changes to the so-called ‘GDO’ condition, which is relevant to the REIT regime and the QAHC regime, as well as the non-resident capital gains tax rules, will be seen as particularly positive by fund investors.

The policy paper for changes to the corporate interest restriction rules set out an extensive list of proposed revisions, most of which seem aimed at eliminating mismatches and inconsistencies. There are two proposed changes to the public benefit infrastructure exemption – ensuring that buildings under construction are not precluded from being a ‘qualifying asset’ and allowing certain financing costs to be deductible where they are payable to third parties via an overseas group company – which seem more substantive and could help bring more groups into the exemption.

Anybody secretly hoping for a delay in the implementation of Pillar Two would have been disappointed to see a renewed commitment for the rules to apply for accounting periods beginning on or after 31 December 2023. Only [291] days to go…

Just as an aside, I watched this Budget not just as a tax professional, but also as a working parent. I was very happy to see the government recognise the importance of affordable childcare as the key to supporting parents who want to remain in, or return to, the workforce. I hope the policy announcements help to keep many more of our talented tax advisers working in the tax community.


Issue: 1611
Categories: In brief