UK charity tax reliefs and exemptions will be restricted to UK charities and community amateur sports clubs (CASCs). The change is effective from 15 March 2023 and affects income tax, CGT, corporation tax, IHT, stamp duty, SDLT, SDRT, annual tax on enveloped dwellings (ATED) and diverted profits tax. Non-UK charities and CASCs that HMRC had accepted before 15 March 2023 as qualifying for charity tax reliefs have a transitional period until April 2024.
Basis period change. 2023/24 is the transitional year in the HMRC process of aligning self-employed people’s trading years with tax years. Make sure you are aware how this will affect you and how you can mitigate the impact of a possible acceleration in your tax payments.
Homes for Ukraine
Temporary relief from the ATED and the 15% rate of SDLT is given for dwellings made available for occupation by individuals granted entry clearance or permission to stay in the UK under the Homes for Ukraine Sponsorship Scheme.
- For ATED, the relief applies to chargeable periods beginning on or after 1 April 2022.
- For SDLT, the relief has retrospective effect from 31 March 2022.
Certain ‘thank you’ payments made by local authorities to sponsors under this scheme are exempted from income tax and corporation tax, with retrospective effect from 14 March 2022.
Trusts and estates
The way in which income tax applies to trusts, estates and their beneficiaries will be simplified with effect from 6 April 2024. Some technical clarifications relating to estate beneficiaries will also be made from 2023/24 onwards. Changes to IHT regulations during 2023/24 will remove some reporting requirements for non-taxpaying trusts.
Assignments of income tax repayments
Taxpayers are no longer legally able to assign their income tax repayments to a third party such as an agent, with effect from 15 March 2023.
CGT assessment time period
A loophole has been closed under which HMRC could be left with no time to assess tax due on capital gains when an asset was disposed of under an unconditional contract completed much later. The date of such a contract is the date of disposal for these purposes. The change will take effect in relation to contracts entered into on or after 1 April 2023 for corporation tax and 6 April 2023 for CGT.
Promoters of tax avoidance
The government is consulting on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a scheme. It is also consulting on speeding up the disqualification of directors of companies involved in promoting tax avoidance, including those who exercise control or influence over a company.
The maximum sentence for ‘the most egregious forms of tax fraud’ will double to 14 years.
Office of Tax Simplification
The Office of Tax Simplification will be abolished with effect from Royal Assent to the Finance Bill 2023, as previously announced.
Cash basis reform
The government is consulting on reforming the cash basis for self-employed people, with a view to increasing the number of eligible businesses and the use of the cash basis. It focuses on the possibility of:
- increasing the turnover thresholds for businesses to use the cash basis;
- setting the cash basis as the default, with an opt-out for accruals;
- increasing the £500 limit on interest deductions; and
- relaxing restrictions on using relief for losses.
Changes will be introduced to CGT self-assessment tax return forms for 2024/25 to require amounts in respect of cryptoassets to be separately identified.
You can also read our our highlights of Spring Budget 2023 Summary
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