This month, the government has published some of the draft legislation and consultations that will form the Finance Bill for 2022-23. Key highlights include changes to net-pay pensions, changes to Research & Development relief and amendments to business rates and levy’s. You can find out more about some of the key highlights which affect UK SME’s below.
Income Tax
Low earners anomaly: pensions relief relating to net pay arrangements
- From April 2024 HMRC will be able to make a top-up for payments to lower-paid taxpayers who are at a disadvantage under net-pay pension arrangements.
- This is due to benefit approximately 1.2 million individuals, 75% of whom are women, who could benefit by an average of £53 a year.
Pension schemes: amendment to taxation of collective money purchase schemes
- This will allow members of the new collective money purchase pension scheme that are winding up to continue to be paid authorised pension payments, or transfer to another pension scheme and receive a drawdown pension.
Tax Registration: landlords and the self-employed
- Following a call for evidence, the government has decided not to move ahead with proposed changes to “Income Tax Self Assessment (ITSA) registration for the self-employed and landlords”: making taxpayers register early for taxes is likely to cause more problems than it would solve.
Corporation Tax
Research and Development (R&D) Tax Relief
- Planned reforms of R&D Tax Relief cover a wider range of expenditure, relief will also be restricted in part to focus more on rewarding UK expenditure.
- Expanding the categories of qualifying expenditure to include data licences and cloud computing. This reflects recent advances in technology and the way R&D is now undertaken.
- Pure mathematics will no longer be an excluded cost.
- When claiming for Sub-contracted work and Externally Provided Workers (EPWs), this will only be granted in future where the work is undertaken in the UK, subject to a limited number of exceptions.
- To tackle abuse, all claims in the future will need: to be submitted digitally (unless exempt from online filing), to have a pre-claim filed in advance, notifying HMRC that a claim will be made (unless a claim has already been made in one of the last three periods) and will need to include the details of any agents who have advised on the claim.
- A number of changes have been made to address anomalies and unintended consequences of the current legislation.
Miscellaneous
Digitalising Business Rates
- As part of its ongoing work on reforming business rates, the government has published a new consultation ‘Digitalising Business Rates: connecting business rates and tax data’. The aim is to join up tax and business rates data to improve compliance, better target policy, and enable businesses to better understand and review their tax liabilities by having them all in one place.
- The consultation follows the 2021 review and consultation both of which proposed Digitalising Business Rates (DBR), with funding being allocated to this in the March 2021 Budget.
Soft Drinks Industry Levy: concentrates mixed with added sugar when dispensed
- The definition of a soft drink which is liable to the Soft Drinks Industry Levy is amended to include packaged concentrates which are mixed with sugar at the point the drink is dispensed from a fountain machine.
- The measure will take effect from 1 April 2023. Existing Soft Drinks Industry Levy rates and provisions will continue to apply.
You can find out more about the Finance Bill 2022-23 online, including a full list of what’s included.