On 30 November 2021, the Government released a number of documents and consultations giving a first look at proposals intended to be considered in the coming months and years.
One of the major areas in which decisions were made was for Capital Gains Tax.
The Office of Tax Simplification (OTS) had made suggestions to the Government some time ago and they have now reviewed these and made the following proposals:
- Extending the reporting and payment deadline for the UK residential property tax returns to 60 days from 30 days so that there is sufficient time for clients and agents to collate the information and make a full report. The Government accepted this and announced the change in the deadline at the Autumn Budget. Now any UK residential property disposals completed on or after 27 October have 60 days in which to file their online report to HMRC and pay the tax due.
- The Government have decided not to align the Capital Gains Tax and Income Tax rates at the current time but will keep this under review going forwards.
- A consultation will be undertaken in order to determine whether and what the benefits of extending the time window for separating and divorcing couples in relation to the period of no gain/no loss transfer of assets. Currently this only exists to the end of the tax year of separation and this can be prohibitive depending on when the separation occurs. The OTS suggested that the extension should either be for 2 years from the date of separation or a reasonable time set in accordance with a Court order. We await more information on this.
- There have been some proposals to expand on the reporting of Capital Gains Tax, similar to the residential disposals, so that it is reported and paid under one single account, rather than via the self-assessment system. The Government proposed to look at this in more detail to consider whether a central hub for reporting and storing of Capital Gains Tax data will be useful.
- Finally, roll over relief will be expanded to include limited liability partnerships and Scottish partnerships who are currently unable to claim relief on exchange of interest held in land, as this was not the intention of the relevant legislation and so amendment will be tabled.
The Right Honourable Lucy Fraser QC MP as Financial Secretary to the Treasury noted in the report that the Government has decided not to proceed with any changes in relation to the Office of Tax Simplification’s review of inheritance tax.
This is good news in that it means tax-free gifts will not be affected and transfers into Trusts not impacted.
The Government considered that a fair tax system should ensure that those who should pay, do pay. It considers that some Stamp Duty Land Tax reliefs have been misused and so a consultation is being opened to look at both mixed property and Multiple Dwellings Relief claims that are being made.
This would take into account mixed properties such as corner shops and bed and breakfasts but also granny flats. Whilst it is felt that arrangements should not be discouraged to provide self-contained residential accommodation at the family home, erroneous claims should be stopped.
Making Tax Digital for Corporation Tax is continuing to be consulted on and there is still much to be done before this can be implemented. At this stage it is felt that there would not be income based exemptions for corporate entities but instead exemptions for specific businesses.
Where businesses are in the scope of country by country reporting from 2022 they will be required to maintain a master file and local file for transfer pricing. This will be in a prescribed format following the OECD transfer pricing guidance and there will be a requirement to provide this to HMRC, on request, within 30 days.
Whilst little was announced on Budget Day, the Government continues to make announcements throughout the year covering various topics and Lambert Chapman are happy to discuss any of these with you as required.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.