Stamp Duty and R&D included in first TAM Day

Chancellor Rishi Sunak made the commitment to have a TAM Day in the Budget. The aim was for a dedicated day this Autumn for the administration and maintenance of the UK’s tax system – supporting greater transparency, discipline and accessibility of tax policymaking.

The 30 publications released by the government on TAM Day include Calls for Evidence, Draft Regulations, Policy Papers and Corporate Reports. They tackle a range of topics, including modernising the UK tax system so it is fit for the 21^st Century; research and development (R&D); business rates; updates to Making Tax Digital (MTD) for companies; and capital gains tax (CGT) administration. Here, we look at some of the key announcements made to mark TAM Day 2021.

CGT and simplifying the tax system

TAM Day’s papers included the Chancellor’s response to the reviews carried out by the Office of Tax Simplification (OTS) into inheritance tax (IHT) and CGT, which included the acceptance of five recommendations from the second report on the technical and administrative issues with CGT.

As already revealed during the Autumn Budget, the time limit for making a CGT return and associated payments on account when disposing of UK residential property by UK residents and UK land and property by non-UK residents has been extended from 30 to 60 days. In addition, the government will also be looking at ways to integrate CGT into the Single Customer Account.

The government also pledged to improve its guidance on several areas, including the UK Property Tax Return, landlords, lodgers, home workers and Business Asset Disposal Relief (BADR).

In responding to the IHT reports, it has already been announced that from 1 January 2022, over 90% of non-taxpaying estates each year will no longer have to complete IHT forms for deaths when probate or confirmation is required. However, in relation to technical policy, the government has decided not to proceed with any further changes or reforms to IHT for the present.

SDLT changes

A consultation on potential changes to Stamp Duty Land Tax (SDLT) for mixed-property purchases and Multiple Dwellings Relief was also opened. This will aim to ensure the system ‘operates fairly and reduces the scope for misuse’.

The two areas impacted will be, firstly, the way SDLT is calculated for purchases of mixed-property – that is, purchases which consist both of residential and non-residential property. Secondly, options to reform Multiple Dwellings Relief, available on the purchase of two or more dwellings.

R&D reform

Another Budget announcement promised that R&D tax reliefs will be reformed from April 2023 to support modern research methods. The consultation around these changes has now been completed and the report published. This will expand qualifying expenditure to include data and cloud costs. The objective is to more effectively capture the benefits of R&D funded by the reliefs by refocusing support towards innovation in the UK. It is also intended to target abuse and improve compliance. 

Business rates review

In response to a long campaign by business groups, the government has opened a technical consultation setting out further detail on the conclusions to the government’s review of business rates in England. This has promised more frequent revaluations, improvement relief, exemptions for green technology and administrative reforms.

Calls for Evidence

Other Calls for Evidence include reforming registration for Income Tax Self Assessment (ITSA) to give taxpayers a better understanding of their tax obligations and the support available to them; compliance and penalties on ISA products; the role that umbrella companies play in the labour market and how they interact with the tax and employment rights systems; and simplifying VAT Land Exemption.

Ten-year plan

The government’s aim is to deliver a modern, simple and effective tax system which helps taxpayers get their tax right the first time. This is all part of the ten-year plan, which was published in July 2020, to modernise the tax administration framework, make better use of real time and third-party information, and progress MTD to improve the experience for taxpayers and businesses, thereby helping to reduce the tax gap and increase resilience.

Only time will tell whether or not the TAM announcements will help the government to achieve these goals.