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On 23 March 2021, the UK government held its first-ever ‘Tax Day’ whereby it published a series of tax documents and consultations. It is all a part of a move to strengthen policymaking and to help create a more “trusted, simple and modern tax system”.

Normally, these tax documents, policy updates and consultations are published as part of the annual Budget delivered by the Chancellor of the Exchequer.

However, they have been released as part of the ‘Tax policies and consultations update (Spring 2021)’. This is an attempt by the government to change the current tax administration burden and making it simpler and easier for taxpayers.

What did the government announce on the UK Tax Day?

In summary, the highlights from these announcements are set out below.

Property related:
  • Second property owners will only qualify for business rates on genuine furnished holiday lets, and the rules will be tightened to stop the abuse. Currently, in England, many holiday lets are liable to pay business rates, rather than council tax, when it is declared that the homes will be let as a furnished holiday let. If they are eligible for the small business rates exemption, this allows the property owner an exemption of up to 100% of business rates. The rules will be tightened to ensure that only genuine furnished holiday lets will qualify for business rates.
  • There are plans to cut inheritance tax red tape for many estates from 1 January 2022 for families who have no inheritance tax liability.
  • A consultation on a new tax for large property developers designed to raise money to pay for the costs of fixing dangerous cladding on flats following the Grenfell fire.

Strengthening the tax system:

  • No safe havens – HMRC will ensure taxpayers comply with their UK tax obligations regardless of where their income or gains are from. The strategy focuses on assisting taxpayers to comply and responding appropriately if they do not.
  • Further measures to clamp down on promoters of tax avoidance schemes.
  • Considering whether tax advisers should be required to hold professional indemnity insurance to help raise standards.

Other announcements:

  • Reviewing whether the current timing and frequency of self-employed tax payments are appropriate. The introduction of making tax digital for the self-employed could see them making monthly returns and payments similar to that of employees under real-time reporting.
  • A consultation on reforming air passenger duty, resulting in lower fees for local flights and long-distance flying fees increasing – supporting the stay at the home message for local tourism within the UK.

These are all only proposals and could change following the consultations, and we will keep you updated as matters progress.

At Ellacotts we are proud to act and support many individuals, small business owners, property and landowners including landlords on a range of complicated tax matters.

If you have any tax queries, please do not hesitate to get in touch with your usual Ellacotts contact or Ann Bibby, Head of Tax and Wealth Planning at abibby@ellacotts.co.uk or 01295 250401. You can also fill out our contact form and we will get back to you.