The latest UK budget announcements were made on 27 October 2021 including the following measures:
Consultation on corporate re-domiciliation
This consultation seeks views on the introduction of a UK re-domiciliation regime, which would make it possible for companies to re-domicile and therefore easier to relocate to the UK.
Promoters of tax avoidance schemes
Changes are proposed to reduce the scope for promoters to market tax avoidance schemes. The measures would help taxpayers to stay out of or leave tax avoidance arrangements.
Research and development (R&D) tax relief
With effect from April 2023 R&D tax relief will be reformed by expanding qualifying expenditure to include data and cloud costs; refocusing support towards innovation in the UK; and improving compliance.
Tonnage tax
The budget proposes reforms to the Tonnage Tax regime, to make it easier for shipping companies to join the regime and reduce the compliance burdens. Amongst other changes the lock-in period will be reduced from ten to eight years.
Abolition of cross-border group relief
This measure repeals legislation allowing UK companies to claim group relief for losses incurred in the EEA, and amends legislation limiting the losses that an EEA resident company trading through a UK permanent establishment can surrender as group relief.
Annual Investment Allowance
The temporary GBP 1 million level of the Annual Investment Allowance is extended until 31 March 2023.
New tax regime for asset holding companies
A new regime is introduced for the taxation of qualifying asset holding companies (QAHCs). A QAHC must be at least 70% owned by diversely-owned funds, or certain institutional investors, and mainly carry out investment activity, with no more than insubstantial trading.
Mutual agreement decisions related to diverted profits tax
Relief against Diverted Profits Tax is to be given where necessary to give effect to a decision reached in a mutual agreement procedure (MAP).
Notification of uncertain tax treatment
There is a new requirement for large businesses to notify HMRC when they take a tax position in their returns that is uncertain. Amounts are uncertain where a provision is made in the accounts for the uncertainty, or where the position taken by the business is contrary to HMRC’s known interpretation.
Residential property developer tax
With effect from 1 April 2022 a new tax is introduced on company profits from UK residential property development. The tax will be charged at 4% on profits above GBP 25 million.
Economic Crime (Anti-Money Laundering) Levy
An Economic Crime (Anti-Money Laundering) Levy is introduced. Entities subject to the Money Laundering Regulations will pay a fixed fee based on their size band as determined by their UK revenue for the period.
Online Sales Tax
A consultation will be held to look at arguments for and against the introduction of an Online Sales Tax.
Basis period reform
For the self-employed and partners the current year basis changes to a ‘tax year basis’ with effect from the tax year 2024/2025. The taxable proft for a tax year will be the profit or loss arising in the tax year itself, regardless of the accounting date of the business. The basis period rules are removed and no further overlap relief will be created.
Other measures
These include:
- Small changes to business rates including more frequent revaluations and temporary 50% relief for 2022/23 for the leisure, retail and hospitality sectors;
- A reduction in the bank surcharge rate from 8% to 3% and a GBP 75 million increase in the surcharge allowance for each group;
- Reduction from 63% to 55% in universal credit taper relief; and
- Restructuring of alcohol duty to tax drinks in proportion to their alcohol content.
