Highlights from the broader tax news for the week ending 21 December 2022, including: Spring Budget date announcement; the Scottish budget 2023-24; marginal relief calculator; spotting payroll company fraud; alcohol duty freeze extension; and taxation of transferred basic life assurance and general annuity business.
Date announced for Spring Budget 2023
In a written ministerial statement on 19 December, Chancellor of the Exchequer Jeremy Hunt confirmed that he had asked the Office for Budget Responsibility (OBR) to prepare a forecast for 15 March 2023 to accompany a Spring Budget.
Scottish budget 2023-24
The Scottish Budget 2023-24 was published on 15 December.
On income tax, the Scottish government proposes to maintain the starter and basic rate bands and the higher rates thresholds at the same level. However, the top rate threshold will reduce from £150,000 to £125,140 from 6 April 2023. While no changes will be made to the starter, basic and intermediate rates, one pence will be added to the higher and top rates of tax to 42 pence and 47 pence respectively.
The additional dwelling supplement for land and buildings transaction tax increases from 4% to 6% from 16 December 2022.
The standard and lower Scottish landfill tax rates will increase from 1 April (to £102.10 per tonne for the standard rate and £3.25 per tonne for the lower rate).
On non-domestic rates, the Scottish government announced a package of support for businesses and communities with various reliefs and rate freezes that take into account the forthcoming 2023 revaluation.
Marginal relief calculator
From 1 April 2023 the corporation tax rate changes to:
- 19% for taxable profits below £50,000 (small profit rate)
- 25% for taxable profits above £250,000 (main rate)
Marginal relief provides a gradual increase in corporation tax rate between the small profits rate and the main rate. HMRC has now launched a calculator to allow companies to check how much marginal relief they may be able to claim.
Guidance on spotting payroll company fraud
Payroll company fraud is when a legitimate business transfers their staff and payroll responsibilities to a fraudulent company, which does not declare or pay the correct taxes to HMRC. The legitimate business is often unaware of any fraud. HMRC has issued guidance on the signs that agencies, employers or workers should look out for.
Government extends alcohol duty freeze
Alcohol duty rates, which had been frozen until 1 February 2023, will now be frozen until 1 August 2023.Although duty rates usually change on 1 February each year, the extended freeze will allow the Chancellor to announce any decision on duty rates in his Spring Budget on 15 March 2023. The freeze also means that if alcohol duty rates are changed in the Budget, the new rates will not take effect until alcohol duty reforms take effect on 1 August 2023.
Changes to taxation of transferred basic life assurance and general annuity business
Two measures will be included in the Spring Finance Bill 2023 to address tax mismatches arising in respect of basic life annuity and general assurance business (BLAGAB).
Under the first measure, the re-insurance will be treated as BLAGAB where:
- there is a re-insurance of BLAGAB; and
- it is reasonable to suppose that the re-insurance arrangements are made in connection with an insurance business transfer scheme under which the business will be transferred to the re-insurer or a person connected with the re-insurer.
This means that BLAGAB-specific tax rules will apply to the re-insurer business from the later of:
- the beginning of the accounting period in which it is reasonable to suppose that the arrangements were first operated in connection with the transfer; and
- 15 December 2022.
Where the re-insurer has adopted IFRS 17 for any accounting periods that commence before 15 December 2022, the BLAGAB rules will also apply to those periods.
The second measure ensures that the BLAGAB rules do not apply where substantially all the insurance risks of a book of BLAGAB are assumed by a re-insurer. This measure will apply to accounting periods ending on or after 15 December 2022. Read more about the measures.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.