Tax Day 2021
Against a backdrop of financial uncertainty, widely anticipated changes (for which read “tax increases”) in the personal taxation regime were notably absent from the Chancellor’s Budget Speech on 3rd March 2021.
As a result, advisers’ attention turned to what might be expected from the UK’s first “Tax Day” on 23rd March. The resulting policy documents and announcements of consultations, in the past published with and possibly going somewhat unnoticed among the Budget documentation, are presented collectively on HMRC’s website under the rather prosaic heading ‘Tax Policies and consultations (Spring 2021)’.
So what do they contain?
Under the general heading ‘Modernising Tax Administration’, we see a call for evidence on “Timely Payment”, essentially a protocol for bringing the date for calculation and payment of tax closer to that on which the relevant income or profit arises. This could in time lead to a requirement for tax on income not already subject to PAYE to be payable quarterly or even monthly. The plans are at an early stage however, open to consultation, and changes will be introduced gradually.
Certain to be pivotal to the eventual infrastructure of “timely payment”, Making Tax Digital is already in effect for VAT-registered businesses and will be extended to Income Tax Self Assessment from April 2023.
In July 2020, the government published a 10-year strategy “to build a trusted, modern tax administration system”. All “Tax Day” proposals are linked to this and include ‘once and done’ notifications across all government agencies.
The requirement to complete Inheritance Tax forms as part of the process of obtaining Probate for Estates where no tax is payable has long been burdensome for executors but changes to be introduced from 1st January 2022 should see 90% of such estates exempted from that obligation.
Moving to ‘Tackling Non-Compliance’, there is a stated intent that HMRC will be clamping down on promoters of tax avoidance, attacking “disguised remuneration” schemes and working towards “No Safe Havens” for offshore arrangements.
The foregoing is far from exhaustive, in fact better categorised as limited to what caught my attention as a personal tax adviser, but as always, please do not hesitate to get in touch with me or your regular contact at Ecovis if there is anything you would like to discuss.