Insights

Weekly Tax Update 3 November 2021

  • Written By: Ami Jack
  • Published: Wed, 03 Nov 2021 18:00 GMT

Tax Update provides you with a round-up of the latest tax developments. Covering matters relevant to individuals, trusts, estates and businesses, it keeps you up-to-date with tax issues that may impact you or your business. If you would like to discuss any aspect in more detail, please speak to your usual Smith & Williamson contact. Alternatively, Ami Jack can introduce you to relevant specialist tax advisors within our firm.

1. General

1.1 Autumn Budget 2021

On 27 October, the Chancellor delivered his second Budget this calendar year. Despite speculation that this Budget could bring significant tax changes, it was light on tax announcements. Our website, linked below, includes our full coverage and analysis.

Overall, this Budget was light on tax announcements, with nothing major on income tax, national insurance, CGT, or IHT. The new health and social care levy had already been announced some weeks ago. The main announcements for businesses are the extension of the increased annual investment allowance, the reform of research and development tax reliefs, and the details of the residential property developer tax.

You can read our full coverage at the link below. This covers the key announcements and commentary on what each measure will mean in practice, together with articles explaining the impact of the changes on various sectors.

On 10 November we will be holding a post-Budget webinar.

https://smithandwilliamson.com/autumnbudget2021/

Autumn Budget podcast

2. Private client

2.1 HMRC ‘educational’ letters: cryptoassets

HMRC has announced a new campaign of ‘educational’ letters. This batch of letters is targeted at those taxpayers who HMRC believes have held cryptoassets, advising them of the potential tax implications of making a disposal and signposting relevant guidance.

These letters will be sent in November to individuals whom HMRC believes have held cryptoassets, based on information HMRC has obtained from third parties. It has previously been reported that HMRC was seeking to obtain data from crypto platforms on their customers.

The letter explains what a disposal of a cryptoasset is, including exchanging it for currency and exchanging one cryptoasset for another. It highlights when CGT may be payable, with links to further guidance. It asks recipients to review their transactions, and explains what to do if they have failed to report taxable disposals.

Taxation of cryptoassets for private clients

www.tax.org.uk/hmrc-s-one-to-many-letter-cryptoassets-project

2.2 HMRC ‘nudge’ letters: foreign tax credit relief

HMRC has announced a new campaign of ‘nudge’ letters, sent to taxpayers that HMRC believes may have incorrectly reported an event, as a way of encouraging them to get their affairs in order without starting a formal enquiry. This batch of letters is targeted at those taxpayers who may have incorrectly claimed foreign tax credit relief.

These letters will be sent in November to taxpayers whom HMRC believes received foreign investment income in 2019/20, and claimed foreign tax credit relief at the wrong rate. They will be asked to check the relevant article of the double tax treaty between the UK and the country their investment income arose in, and make any necessary corrections to their return. The letter provides links to further guidance.

www.tax.org.uk/hmrc-s-one-to-many-letter-foreign-tax-credit-relief-double-taxation-allowance-project

3. Trusts, estates and IHT

3.1 Regulations to increase excepted estate numbers published

From 1 January 2022, fewer estates will have to complete IHT returns, as the categories for exemptions are being broadened to include most non-taxpaying estates. This was previously announced, but the legislation has now been published.

Currently, many executors have to file IHT returns for estates that are not due to pay IHT, in order to obtain probate, as the categories for excepted estates are relatively narrow. They are to be extended, which will not change anything for taxpaying estates, but will reduce administration costs for small estates. This was announced in March 2021. The legislation has now been published. This will come into force on 1 January 2022.

There are various changes, which include:

  • for estates with a gross value over the IHT threshold, but with a net value after deducting exempt legacies and expenses under the threshold, the reporting limit for gross value will be increased from £1m to £3m;
  • for estates with a total gross or net value below the IHT threshold, the reporting limit for chargeable lifetime transfers in the seven years before death will be increased from £150,000 to £250,000; and
  • administrative changes on how much information these estates need to provide to HMRC instead of an IHT return will be made.

www.step.org/industry-news/uk-iht-regulations-amended-exempt-many-more-estates

www.legislation.gov.uk/uksi/2021/1167/contents/made

4.3 Webinars

The following client webinars are coming up over the next week.

  • 10 November 2021: S&W Sessions: Autumn Budget 2021
  • 11 November 2021: Investment and Tax Planning for multi-jurisdictional client

https://smithandwilliamson.com/en/events/

5. And finally

5.1 Imposture

What a desperately dull tax Budget that was! There will be those who are happy for sleeping dogs to be let lie, no matter how flea-ridden they are. And finally sees things from a different point of view. It’s not that we have an agenda; it’s just that we love change in tax, almost without regard to what the change is, or how merited. Rate rises and rate reductions are all the same to us: any change is fun.

We did get an entirely new levy: the Economic Crime (Anti-Money Laundering) Levy. That’s the second levy in weeks. What’s the Government getting at with these levies? Are we to suppose that a levy is just to pay for something specific? Perhaps the health and social care levy is so called because it isn’t national insurance, but national insurance itself is hardly all for national insurance. Don’t be taken in by this imposture; it’s all tax in the end. ‘Levy’ might get worn out pretty quickly. How, then, about ‘impost’ instead? What’s an impost? Something levied of course. Levied? Raised as tax, silly.

www.gov.uk/government/publications/economic-crime-anti-money-laundering-levy/economic-crime-anti-money-laundering-levy

View previous tax update

Ref: NTAJ141121105

Glossary

Organisations   Courts Taxes etc  
ATT – Association of Tax Technicians ICAEW - The Institute of Chartered Accountants in England and Wales CA – Court of Appeal ATED – Annual Tax on Enveloped Dwellings NIC – National Insurance Contribution
CIOT – Chartered Institute of Taxation ICAS - The Institute of Chartered Accountants of Scotland CJEU - Court of Justice of the European Union CGT – Capital Gains Tax PAYE – Pay As You Earn
EU – European Union OECD - Organisation for Economic Co-operation and Development FTT – First-tier Tribunal CT – Corporation Tax R&D – Research & Development
EC – European Commission OTS – Office of Tax Simplification HC – High Court IHT – Inheritance Tax SDLT – Stamp Duty Land Tax
HMRC – HM Revenue & Customs RS – Revenue Scotland SC – Supreme Court IT – Income Tax VAT – Value Added Tax
HMT – HM Treasury   UT – Upper Tribunal    

 

 

 

DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

 

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