The government has published a series of tax documents and consultations in a move to strengthen policymaking and help create a more trusted, simple and modern tax system on its first Tax Day
More than 30 policy updates, consultations and documents that would traditionally be published at Budget have been released as part of the ‘Tax policies and consultations update (Spring 2021)’ – allowing more space for scrutiny from stakeholders.
At the heart of the Treasury’s objectives is to overhaul the tax administration framework, to create a trusted, modern tax administration system that is simpler, easier to navigate, and meets the needs of taxpayers.
As part of the release, the government has announced it will legislate to tighten tax rules for second property owners meaning they can only register for business rates if their properties are genuine holiday lets.
In England, many holiday lets are liable to pay business rates, rather than council tax, when an owner declares that they intend to let their property in the next year. They may also be able to claim rates relief of up to 100%. The change will ensure that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little or no realistic effort to actually let it out.
There are also plans to cut inheritance tax red tape for more than 200,000 estates every year, dramatically reducing the amount of paperwork many families fill out. Over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms when probate or confirmation is required from 1 January 2022. None of today’s announcements will have any impact on the government’s finances or require legislation in the current Finance Bill.
As previously trailed the Treasury also plans to cut the rate of domestic Air Passenger Duty. The consultation also seeks views on supporting the UK’s commitment to net zero emissions by 2050 by increasing the number of international distance bands.
Financial secretary to the Treasury Jesse Norman said: ‘We are making these announcements in order to increase the transparency, discipline and accessibility of tax policymaking.
‘These measures will help us to upgrade and digitise the UK tax system, tackle tax avoidance and fraud, among other things.
‘Many of today’s announcements form a key part of the government’s wider 10-year plan to build a trusted, modern tax system.’
The plan, published in July 2020, sets out a strategy to improve the resilience and effectiveness of the country’s tax administration system over the next decade. A number of the consultations and calls for evidence focus on this area, including:
- clamping down on promoters of tax avoidance schemes;
- considering whether tax advisers should be required to hold professional indemnity insurance to help raise standards;
- examining whether the current timing and frequency of tax payments are appropriate.
The government is also seeking views through a call for evidence on how the legislation underpinning HMRC’s administration of the tax system could be updated to make the tax system easier to deal with and help make tax more straightforward for taxpayers, and also help build greater resilience and capacity to respond to future crises.
Chris Sanger, chair, Tax Professionals’ Forum and Ernst & Young tax policy leader said: ‘Tax Policies and Consultations Day represents a welcome innovation in the UK’s well-regarded tax policy making process. Releasing a suite of forward-looking consultation documents on a single day, the date of which is announced in advance, reinforces the importance that the government rightly places on meaningful engagement with taxpayers on tax matters and will help to ensure that its policy making objectives are met.’
John Cullinane, director of public policy for the Chartered Institute of Taxation (CIOT), said: ‘We welcome the establishment of a ‘tax consultation day’ in addition to the Budget as an opportunity for more focused scrutiny of tax measures and for broadening the public conversation about tax.
‘Early and open consultation, seeking views and ideas as widely as possible at the earliest possible stage of policy development, leads to better tax law, which is in the interests of both taxpayers and their advisers, and the tax authority. We look forward to responding to the consultations launched today and encourage others to do likewise.’