As announced at the spring budget the Government are setting out further technical tax policy proposals that support their ambition to simplify and modernise the tax system, tackle non-compliance, make the tax system fairer for taxpayers and to make the customs system work better for traders.
Simplification and modernisation
The Government want the tax system to be simple, fair and to support growth. In autumn 2022, the Government issued a clear mandate to put tax simplification at the heart of policy making.
The spring budget announced the first steps, with a range of improvements to make it easier for businesses to interact with the tax system. This included:
a systematic review to improve HMRC guidance and key forms for small businesses
a consultation to expand the “cash basis”, a simplified way for over four million sole traders to calculate and pay their income tax
delivering the IT changes to enable agents to payroll benefits in kind on behalf of employers, and
a package of measures to simplify customs import and export processes for traders, taking advantage of new freedoms following EU exit and promoting economic growth by making importing and exporting as easy as possible.
The Government are now taking the next steps to make tax as simple as possible for taxpayers.
First, the Government are committed to supporting saving and investment through simplification of the tax system. Announcements today include:
Help to Save: At spring budget 2023 the Government announced that they will extend the Help to Save (HtS) scheme in its current form by 18 months until April 2025 and set out the intention to launch a consultation. The Government are now publishing a consultation on the scheme design to determine how it could be simplified.
Modernisation of the stamp taxes on shares framework: The Government are publishing a consultation on proposals to modernise and digitise the framework for stamp taxes on shares. This consultation seeks views on proposals to ensure that any new framework will meet its objectives for a simple, clear and efficient tax system.
The Government are publishing two further documents as part of HMRC’s wider tax administration framework review (TAFR). These documents continue our work to ensure the UK’s tax administration framework keeps pace with the challenges and opportunities of the 21st century, and supports a modern and effective tax system.
Information and data: Smarter use of information and data, including from third parties, has the potential to simplify tax administration for individuals and businesses, and improve HMRC’s compliance capabilities. This call for evidence focuses on how legislation could be updated to standardise and simplify data provision, and make sure taxpayer information is appropriately protected.
A legislative approach to piloting: This discussion document seeks views on a new approach known as a “sandbox” that HMRC could use to pilot changes. The document will explore opportunities and challenges of possible sandbox testing models, and what safeguards might be necessary and proportionate.
Building on the customs announcements made at spring budget:
Customs treatment of post and parcel exports: The Government are publishing a consultation on proposals to improve the customs treatment of post and parcel exports. This is to ensure customs facilitations for low-value post and parcels are as beneficial as possible, while creating a level playing field for operators to export low- value goods with ease.
Tackling the tax gap
Since 2010 the Government have introduced over 200 new measures and invested over £2 billion extra in HMRC to tackle non-compliance in the tax system. In 2021-22, HMRC secured and protected £30.8 billion for public services that would otherwise have gone unpaid.
This action has ensured the tax gap has remained on a long-term downward trend and one of the lowest published worldwide. We remain committed to driving the tax gap down further.
The consultations announced today build on announcements at spring budget:
Tackling non-compliance in the umbrella company market: The Government will shortly publish a summary of responses to the 2021 call for evidence on the umbrella company market. Alongside this, the Government will publish a consultation on policy options to regulate umbrella companies and to tackle non-compliance in the umbrella company market.
Tackling promoters of tax avoidance: As announced at spring budget the Government are publishing a consultation on both the introduction of a new criminal offence for promoters of tax avoidance and expediting the disqualification of directors of companies involved in promoting tax avoidance.
Repayment Agents: As announced on 11 January 2023, the Government will require repayment agents to register with HMRC to protect vulnerable customers. Repayment agents will need to register (within a three-month window) starting on 2 May 2023.
Further tax policy and administration announcements
The Government are also making a number of other tax policy announcements to improve tax administration, increase transparency and address concerns that have been raised including:
National Insurance credit changes: The Government recognise concerns that some parents who have not claimed child benefit could miss out on their future entitlement to a full state pension. The Government will address this issue to enable affected parents to receive a national insurance credit retrospectively. Further detail on next steps will be available in due course.
Plastic packaging tax: The Government will consult on allowing a mass balance approach for calculating the proportion of recycled content in chemically recycled plastics, for the purposes of the plastic packaging tax. The consultation will be launched later this year.
The full list of publications and announcements can be found at:
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