Thursday 18 April 2024 was 'Tax Administration and Maintenance Day'. The government published several tax policy proposals and updates, including changes to VAT on charitable donations and tackling non-compliance in the umbrella companies market.

birds in formation

Consultation on the VAT treatment of private hire vehicles

  • A consultation on the potential tax impacts of the Uber Britannia Limited v Sefton Borough Council and Uber London Limited v Transport for London High Court judgments has been published. 
  • Views are sought on government interventions that might help mitigate adverse effects on the private hire vehicle sector and its passengers.
  • The consultation closes on 8 August 2024. 

See VAT treatment of private hire vehicles consultation

VAT treatment of charitable donations

  • A consultation will be published before 23 July 2024 to explore the introduction of UK-wide VAT relief for low-value goods which businesses donate to charities, for those charities to give away free of charge to people in need. At present: 
    • Businesses do not pay VAT on goods they donate which are sold on.
    • Where donated goods are not sold, but are instead distributed free of charge to those in need, VAT must be accounted for. 
  • Donations which may be within the scope of the proposed relief could include anything that may be of use to a household. Examples given include: 
    • Hygiene items (soap, toothpaste, toothbrushes, shower gel and toilet rolls).
    • Second-hand items from hotels (such as sheets, and kettles).
    • Cleaning supplies, including laundry detergent.
  • Goods which are donated to charities for them to use, such as new IT equipment, will not be included in the proposed relief.  

Tackling non-compliance in the umbrella companies' market

  • Last summer, the government consulted on Options to reduce tax non-compliance in the umbrella companies market. Its response will be published in due course.
  • HMRC will publish new guidance later this year which will include an online pay-checking tool, to verify whether correct deductions are being made from pay.
  • The government also intends to introduce a due diligence requirement to tackle bad actors in labour supply chains.
    • Engagement with the recruitment industry and other key stakeholders will consider the details of a statutory due diligence regime aimed at reducing non-compliance.

Mandating postcode provision for Freeports and Investment Zones National Insurance contributions reliefs

  • The government intends to bring forward a legislative change to mandate employers operating in a Freeport or Investment Zone to provide their employee’s workplace postcode to HMRC, where they are claiming secondary Class 1 National Insurance Contributions (NICs) relief through their payroll.
    • This data is intended to reduce employer error and enable assurance of claims by HMRC without HMRC having to contact the employer.
  • A four-week technical consultation on draft regulations has now been published. It closes on 15 May 2024. 
    • After the consultation, secondary legislation will be brought forward. Software developers will be given time to make changes ahead of implementation.

See HMRC: Freeport and Investment Zone employer National Insurance contributions reliefs

Useful guides on this topic

Business Gifts
What are business gifts? Are business gifts allowable for tax? What needs to be disallowed?

Starting Work 5. Agency or Umbrellas
Working via an agency: how to spot whether you are being paid correctly. This guide shows you what to expect.

Tax and taxis: Is there a new 'taxi tax'?
Some news outlets seem to think that there is a new form of  'taxi-tax'. There is no new tax but a dispute about VAT. We take a closer look at the issues.

Freeports: Tax breaks
What are Freeports? Where are they located? What are the tax advantages?

Investment Zones: Tax breaks
What is an Investment Zone? Where are Investment Zones located? What are the tax advantages of running a business from an Investment Zone? When are the reliefs available?

External links

HMRC: Tax administration and maintenance summary: Spring 2024

HM Treasury: Boost to everyday charitable donations through new VAT relief

Parliamentary statement: Tax Administration and Maintenance: Spring 2024