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Autumn Budget 2018 – Administrative and other matters

Voluntary tax returns
Historically HMRC have exercised discretionary collection and management powers to accept and treat voluntary income and corporation tax self-assessment returns received on the same basis as tax returns received under a statutory notice to file. In the light of recent legal challenges to the practice and the validity of returns received voluntarily, legislation will be introduced with retrospective effect to put the practice onto a statutory basis. This change is intended to remove any doubt for taxpayers that voluntary tax returns have and will continue to be accepted as valid returns. The measure will have retrospective and prospective effect from the date of Royal Assent to Finance Bill 2018-19.

Interest provisions for late payment, repayment and penalties
The detail of how interest is applied to late payments for corporation tax, Stamp Duty and SDLT and to penalties imposed for failure to comply with obligations under PAYE, is to be clarified.

New provisions will also clarify and confirm the basis for interest calculations in respect of Diverted Profit Tax and repayment interest by HMRC, and ensure that the 2009 interest provisions apply in relation to penalties charged under the Promoters of Tax Avoidance Schemes (POTAS) legislation.

From Royal Assent of the Finance Bill 2018/19, the changes will have retrospective and prospective effect from the date the relevant interest was first applied.

HMRC to join preferred creditor list
From 6 April 2020, the government will change the rules so that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers and temporarily held in trust by the business go to fund public services, rather than being distributed to other creditors. This reform will only apply to taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE income tax, employee National Insurance contributions and Construction Industry Scheme deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as corporation tax and employer National Insurance contributions. This will be legislated for in Finance Bill 2019/20.

Tax treatment of Social Security Benefits
Legislation will be introduced in Finance Bill 2018/19 to clarify the income tax treatment of nine social security benefits. The tax treatment of these benefits will be legislated for as follows:

– Young Carer Grant, Best Start Grant, Funeral Expense Assistance and Discretionary Housing Payments, payable under the Social Security (Scotland) Act 2018, will be legislated for as tax exempt.
– Carer’s Allowance Supplement payable under the Social Security (Scotland) Act 2018 will be legislated to confirm the payments are taxable
– Discretionary Support Scheme payable under the Discretionary Support Regulations (Northern Ireland) 2016, will be legislated for as tax exempt
– Council Tax Reduction Scheme payable under the Local Government Finance Act 1992 will be legislated for as tax exempt
– Discretionary Housing Payments payable under the Child Support, Pensions and Social Security Act 2000 will be legislated for as tax exempt
– Flexible Support Fund payable under the Employment and Training Act 1973 will be legislated for as tax exempt

National Living Wage/National Minimum Wage
The Low Pay Commission (LPC) has recommended, and the Government has accepted, that the hourly rates should increase in April 2019 as follows:

– from £7.83 to £8.21 for workers aged 25 and over (the National Living Wage)
– from £7.38 to £7.70 for 21-24 year olds
– from £5.90 to £6.15 for 18-20 year olds
– from £4.20 to £4.35 for 16-17 year olds
– from £3.70 to £3.90 for apprentices aged under 19 or in the first year of their apprenticeship.

Social Investment Tax Relief review
As announced at Autumn Statement 2016, the government will publish a call for evidence on the Social Investment Tax Relief early in 2019. The review will consider why take up of the scheme is lower than anticipated, and the design and targeting of the relief.

Consultation on the taxation of trusts
As announced at Autumn Budget 2017, the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent.

Online platforms role in ensuring tax compliance
The government will publish its response to the call for evidence The Role of Online Platforms in Ensuring Tax Compliance by Their Users, which was launched at Spring Statement 2018. This will set out the government’s intention to improve guidance for people and businesses earning money through online platforms, and to explore how greater use of data can further support sustainable compliance with the tax rules.

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