Legislation day is designed to provide a longer period for consultation on draft legislation for potential inclusion in the next Finance Bill. Most measures have been subject to prior consultation or were announced at the Spring Budget 2023. The draft legislation published on 18 July is open for consultation until 12 September 2023. 

R&D tax relief 

The government has consulted previously on merging the SME R&D tax relief regime with R&D expenditure credits (RDEC). While the government has published draft legislation on the proposed design of a merged scheme alongside a summary of responses to the consultation, a final decision on whether to merge schemes from April 2024 will be taken at a future fiscal event. 

Additional tax relief for R&D intensive SMEs from 1 April 2023 was announced at the Spring Budget. The written ministerial statement that was issued alongside the draft legislation confirms that this would continue to operate alongside any merged scheme. 

Creative industry and cultural tax reliefs 

Draft legislation has also been published for various other corporation tax reliefs. This includes:  

• changes to the audio-visual tax reliefs from 1 January 2024 (subject to transitional rules);
• administrative changes to the creative industry tax reliefs (including the completion of an online information form from 1 April 2024); and
• technical clarification of the rules for cultural tax reliefs to apply from 1 April 2024.

Pensions

Following the removal of the pensions lifetime allowance charge from 6 April 2023, the government has published draft legislation to abolish the pensions lifetime allowance. It has also published draft legislation to support the modernisation of tax relief at source for pensions.

Administrative changes to the high income child benefit charge

Following the announcement on Tax Administration and Maintenance Day that the government would address national insurance credits for parents who have not claimed child benefit (to avoid triggering the high income child benefit charge), the government has now confirmed that it wants to simplify the process for taxpayers who become liable to the charge. ICAEW’s Tax Faculty observes that while these changes might improve the administrative issues associated with the charge, it falls well short of the fundamental review required of the policy.

Tackling avoidance and evasion

The government has published draft legislation to create a new criminal offence. It will apply to promoters of tax avoidance schemes who fail to comply with a HMRC legal notice requiring them to stop promoting an avoidance scheme. Additionally, draft legislation will enable HMRC to apply to the court for a disqualification order against directors of companies involved in promoting tax avoidance.

Draft legislation has also been published to double the maximum sentences for the most egregious cases of tax fraud from seven to 14 years.

New consultations

Alongside the draft legislation, four new consultations were launched on 18 July. These are:

• Taxation of employee ownership trusts and employee benefit trusts
• Updating the VAT Terminal Markets Order legislation
• Plastic Packaging Tax - mass balance approach
• Energy Profits Levy and the Energy Security Investment Mechanism

Read the announcements and see the full list of draft legislation:

• Written ministerial statement
• Draft legislation published for Finance Bill 2023-24