Missed our SME Tax Web-updates in December? Here is a summary of the month.
SME Tax News
Season's Greetings
This week, we combine some festive-themed elements with Artificial Intelligence (AI). On the more serious tax front, we take a look at the Scottish and Welsh budgets and have some top tips for various types of taxpayer.
The Welsh Government has launched two new Land Transaction Tax (LTT) consultations. The first explores extending the LTT higher rates three-year exception and refund period, in specific circumstances. The second consultation looks at introducing LTT relief for special tax sites, such as Freeports and Investment Zones.
HMRC have issued a reminder that employers may accidentally be underpaying temporary staff engaged in seasonal jobs. Employees should check their wage slips to ensure that the actual hours paid are those worked.
Scottish Deputy First Minister Shona Robison announced the draft Scottish Budget for 2024-25 on 19 December 2023. A new Income Tax Advanced Rate of 45% will be introduced, meaning that, for example, a person with dividend income alongside employment, self-employment or rental income, has up to ten Income Tax rates to consider.
The Welsh Government released their Draft Budget for 2024-25 on 19 December 2023.
The Draft Budget signals the Welsh Government’s intentions for the three devolved Welsh taxes: Welsh Rates of Income Tax (WRIT), Land Transaction Tax and Landfill Disposals Tax.
Income Tax
Proposed for 2024-25:
- The Welsh Rates of Income Tax rate will remain at 10%.
- This will retain parity between the rates of Income Tax in Wales and England/Northern Ireland for the 2024-25 tax year.
|
Income band £ |
|||
|
Rate |
Tax rate |
2024-25 (proposed) |
2023-24 |
|
Personal allowance (tax-free band) |
N/A |
£0 - £12,570 |
£0 - £12,570 |
|
Basic rate |
20% |
£12,570 - £50,270 |
£12,570 - £50,270 |
|
Higher rate |
40% |
£50,270 - £125,140 |
£50,270 - £125,140 |
|
Additional rate |
45% |
£125,140+ |
£125,140+ |
Land Transaction Tax (LTT)
- Land Transaction Tax (LTT) rates remain under review, with no changes currently proposed.
See Welsh LTT Rates for current rates.
Landfill Disposal Tax (LDT)
Proposed for 2024-25:
- Landfill Disposal Tax (LDT) rates will increase in line with Retail Price Index (RPI) inflation.
- Rates from 1 April 2024 will be:
- Standard: £103.70 (2023-24: £102.10).
- Lower: £3.30 (2023-24: £3.25).
- Unauthorised disposals: £155.55 (2023-24: £153.15).
Other announcements and updates
Developing LTT policy
- Consultations have been published on:
- Draft regulations to extend the LTT higher residential rates three-year exception and refund periods, where transactions are impeded by fire safety defects or where transactions are prevented by emergency restrictions.
- Legislative amendments to provide relief from LTT for qualifying transactions within a designated special tax site as part of the Freeports Programme in Wales.
- See Welsh LTT consultations
Non-domestic rates
- The increase to the Non-Domestic Rates (NDR) multiplier in Wales will be capped at 5% for 2024-25
- Support for retail, leisure and hospitality businesses will be given by way of 40% NDR relief for the duration of 2024-25, capped at £110,000 per business.
- A fund will be developed to provide support to eligible small to medium-sized businesses in the retail, leisure and hospitality sectors, with funding to be used during 2024-25 to invest in measures to future-proof their businesses.
- The Local Government Finance (Wales) Bill was introduced into the Senedd on 20 November.
- This will provide the legislative basis required to implement non-domestic rates reform for Wales, along with three-yearly revaluations.
Visitor levy
- Legislation for a visitor levy will be introduced into the Senedd by Autumn 2024.
Devolution of powers
- The Welsh government continue to engage with the UK government to seek powers for a Vacant Land Tax, as well as to seek review and reform of the process for the devolution of new tax powers.
Useful guides on this topic
Wales
This section covers taxes devolved to Wales.
Welsh Income Tax
Since 6 April 2019, Wales has been able to set its own Welsh Rate of Income Tax.
Welsh Land Transaction Tax (LTT)
What is Land Transaction Tax? How does it operate? What reliefs are available?
External links
Written Statement: Draft Budget 2024-25
Documents: Draft Budget 2024 to 2025
Hello
As 2023 draws to a close, so too does the 2022-23 Self Assessment deadline. Our theme this week is ‘last minute tax returns’ and we feature a number of guides to help answer those last minute FAQs including our top tips of things to consider. HMRC has a new Employer Bulletin and has published its responses to its VAT energy-saving materials relief. We have news of further VAT 'nudge letters', and more letters to taxpayers identified by HMRC through the disclosures made in the 'Pandora Papers'.
In OOCL UK Branch v HMRC [2023] TC09007, the First Tier Tribunal (FTT) found that payments made to employees, funded by a company’s former majority shareholder out of sale proceeds as a gesture of thanks, were made by reason of employment. PAYE and NICs applied.
HMRC have published their Employer Bulletin for December 2023. We have summarised the key content for you, with links to our detailed guidance on the topics covered.
In Felicity Harber v HMRC [2023] TC09101, ‘artificial intelligence’ (AI) failed to assist a taxpayer in her appeal against penalties after it emerged that it had invented the case citations she had relied on in her defence. The First Tier Tribunal (FTT) found that this was not the first time that AI created fake cases.