Policy paper

Autumn Budget 2021: Overview of tax legislation and rates (OOTLAR)

Published 27 October 2021

Introduction

This document sets out the detail of each tax policy measure announced at Autumn Budget 2021 and of previously announced measures that will be included in Finance Bill 2021-22. It is intended for tax practitioners and others with an interest in tax policy changes, especially those who will be involved in consultations both on the policy and on draft legislation.

Finance Bill 2021-22 will be published on 4 November 2021. The information in the document is set out as follows:

Chapter 1 contains details of all measures that are included in Finance Bill 2021-22.

Chapter 2 contains details of measures which are part of Autumn Budget 2021 but are not in Finance Bill 2021-22.

Table 1 lists measures where draft legislation was published on 20 July 2021, for consultation, and which remain unchanged.

Table 2 lists measures in this document without a corresponding announcement in the Budget report.

Annex A provides tables of tax rates and allowances for the tax year 2021 to 2022 and the tax year 2022 to 2023.

Annex B lists upcoming consultations, calls for evidence and other consultative documents announced at Autumn Budget 2021. The government will bring forward a further set of tax administration and maintenance announcements later in the autumn. This follows a similar set of announcements published in the Command Paper, “Tax policies and consultations (Spring 2021)”. None of these announcements will require legislation in Finance Bill 2021-22 or have an impact on the government’s finances at this stage.

Annex C provides a guide to the impact assessments in tax information and impact notes.

Chapter 1 — Finance Bill 2021-22

Personal Tax

1.1 Income tax charge and rate

The government will legislate in Finance Bill 2021-22 to set the charge for income tax, and the corresponding rates, as it does every year. Finance Bill 2021-22 will set:

  • the main rates for 2022 to 2023, which will apply to non-savings, non-dividend income of taxpayers in England, Wales, and Northern Ireland
  • the savings rates for 2022 to 2023, which will apply to savings income of all UK taxpayers
  • the default rates for 2022 to 2023, which will apply to a very limited category of income taxpayers that will not fall within the above two groups, made up primarily of trustees and non-residents

Income tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. The UK rates are reduced by 10p in £1 for Welsh taxpayers, and the Welsh rates of income tax for non-savings, non-dividend income are set by the Welsh Parliament and added to the UK rates.

1.2 Starting rate for savings limit

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to set the 0% band for the starting rate for savings income, which will remain at its current value of £5,000 for 2022 to 2023. This measure will apply to the whole of the United Kingdom.

1.3 Increase of the rates of income tax applicable to dividend income

As announced on 7 September 2021, the government will legislate in Finance Bill 2021-22 to increase the rates of income tax applicable to dividend income by 1.25%.

The dividend ordinary rate will be set at 8.75%, the dividend upper rate will be set at 33.75% and the dividend additional rate will be set at 39.35%. The dividend trust rate will also increase to 39.35% to remain in line with the dividend additional rate. The changes will apply UK-wide and will take effect from 6 April 2022.

The Increase of the rates of Income Tax applicable to dividend income tax information and impact note provides more information.

1.4 Basis Period Reform

Following consultation over the summer 2021, the government will legislate in Finance Bill 2021-22 to simplify the basis period rules for the self-employed and partners.

The draft legislation published on 20 July 2021 will be revised to incorporate suggestions from the consultation, including more flexible use of overlap relief in the transition year and provisions to reduce the impact of transition profits on allowances and benefits.

The changes also delay transition by a year, meaning the transition to the new rules will take place in 2023 to 2024 and the new rules will come into force from 6 April 2024. The government will publish a response document to the consultation on 4 November 2021 outlining the feedback received and changes to the policy that have been made.

The Basis Period Reform tax information and impact note provides more information.

1.5 Increasing Normal Minimum Pension Age

The government will legislate in Finance Bill 2021-22 to increase the earliest age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge, the normal minimum pension age, from 55 to 57. This increase will have effect from 6 April 2028.

1.6 Taxation of public service pension reform remedy

As announced in the government’s Tax Policies and Consultations Command Paper published on 23 March 2021, the government will introduce legislation in Finance Bill 2021-22 with supporting regulations to ensure the pensions tax framework applies as intended to the public service pension reforms (the ‘McCloud’ case) remedy.

The remedy, which addresses the discrimination by making changes to the pension provision of those public servants affected, is set out in the Public Service Pensions and Judicial Offices Bill which will have retrospective effect from 1 April 2015. The tax legislation will also apply to this retrospective period. This measure will take effect from 6 April 2022.

The Taxation of public service pension reform remedy tax information and impact note provides more information.

1.7 Pensions: Scheme Pays Reporting

As announced in the government’s Tax Policies and Consultations Command Paper published on 23 March 2021, the government will introduce legislation to extend Scheme Pays reporting and payment deadlines. This will allow an individual to ask their pension scheme to settle their annual allowance charge of £2,000 or more from a previous tax year by reducing their future pension benefits. The changes will have effect from 6 April 2022.

The Pension Scheme Pays reporting: information and notice deadlines tax information and impact note provides more information.

Corporate Tax

1.8 Corporation tax: Amendments to the surcharge on banking companies

The government will legislate in Finance Bill 2021-22 to set the rate of the surcharge on banking companies at 3% and increase the surcharge allowance from £25m to £100 million. This measure will have effect from 1 April 2023.

The Amendments to the surcharge on banking companies tax information and impact note provides more information.

1.9 New tax regime for asset holding companies (AHCs)

As announced in December 2020, the government will legislate in Finance Bill 2021-22 to introduce a regime for the taxation of qualifying asset holding companies (QAHCs). Following two consultations, draft legislation was published on 20 July 2021, which has been refined to reflect input from stakeholders.

The regime will cover the taxation of QAHCs as well payments made by QAHCs (including changes to the remittance basis). This measure will take effect from 1 April 2022.

The New tax regime for asset holding companies (AHCs) tax information and impact note provides more information.

1.10 Extension to Museum and Galleries Exhibition Tax Relief sunset clause

The government will legislate in Finance Bill 2021-22 to extend the sunset clause for the Museums and Galleries Exhibition Tax Relief for a further two years until 31 March 2024.

The Extension to Museum and Galleries Exhibition Tax Relief sunset clause tax information and impact note provides more information.

1.11 Cultural Relief Rate Rises for Theatre, Orchestra, and Museums and Galleries Exhibition Tax reliefs

The government will legislate in Finance Bill 2021-22 to temporarily increase the headline rates of relief for the Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), and Museums and Galleries Exhibition Tax Relief (MGETR) for expenditure taking place from 27 October 2021, returning to current rates by 1 April 2024.

The rates for TTR and MGETR will increase from 20% (for non-touring productions) and 25% (for touring productions) to 45% and 50% respectively from 27 October 2021. From 1 April 2023, the rates will be 30% and 35%, and rates will return to 20% and 25% on 1 April 2024. For MGETR, the relief will expire after 31 March 2024 and no expenditure after this date will be eligible for relief.

The rates for OTR will increase from 25% to 50% for expenditure taking place from 27 October 2021, reducing to 35% from 1 April 2023, and returning to 25% from 1 April 2024. The rates are set out in Annex A.

The Cultural Relief Rate Rises for Theatre, Orchestra, and Museums and Galleries Exhibition Tax reliefs tax information and impact note provides more information.

1.12 Switch between Film Tax Relief and High-End TV Relief during production

The government will legislate in Finance Bill 2021-22 to allow film production companies to claim Film Tax Relief for films that were initially intended to be released in cinemas, but which are instead put on streaming services, as long as they meet the criteria for High-End TV Tax Relief. This will ensure that relief is not lost should a company decide to change its distribution method during production. It will apply to any new film commencing production on or after 1 April 2022, and to ongoing productions that have not completed principal photography by 1 April 2022.

The Switch between Film Tax Relief and High-End TV Relief during production tax information and impact note provides more information.

1.13 Theatre, Orchestra, and Museums and Galleries Exhibition Tax reliefs

The government will legislate in Finance Bill 2021-22 to introduce changes to better target the cultural reliefs and ensure that they continue to be safeguarded from abuse. Changes will take effect for companies entering production from 1 April 2022.

The Theatre, Orchestra, and Museums and Galleries Exhibition Tax reliefs tax information and impact note provides more information.

1.14 Diverted profits tax: giving effect to Mutual Agreement Procedure decisions

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to enable HMRC to implement tax treaty Mutual Agreement Procedure (MAP) decisions relating to the diverted profits tax. This change will take effect in relation to MAP decisions reached after 27 October 2021.

The Mutual Agreement Procedure (MAP) decisions relating to the Diverted Profits Tax tax information and impact note provides more information.

1.15 Diverted Profits Tax: interaction with corporation tax closure notices and amendment to relieving provisions

As announced at Autumn Budget 2021 the government will legislate in Finance Bill 2021-22 to:

  • preserve the intended route for a company to obtain relief from diverted profits tax under sections 101A and 101B of Part 3 of the Finance Act 2015 (as amended by Schedule 6 to the Finance Act 2019)
  • confirm that HMRC cannot close corporation tax enquiries into profits subject to a diverted profits tax charge until after the Diverted Profits Tax review period ends

The changes to sections 101A and 101B will take effect from 27 October 2021.

The change in relation to closure of corporation tax enquiries will come into force on 27 October 2021 and will apply to any application for a corporation tax closure notice made on or after 27 September 2021.

The Diverted Profits Tax: interaction with Corporation Tax closure notices and amendment to relieving provisions tax information and impact note provides more information.

1.16 Abolition of cross-border group relief

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to repeal the cross-border group relief rules contained in Chapter 3 of Part 5 of the Corporation Tax Act 2010 and make related amendments to rules applying to losses of European Economic Area (EEA) resident companies trading in the UK through permanent establishments. The changes will take effect from 27 October 2021.

The Abolition of cross-border group relief tax information and impact note provides more information.

1.17 Corporation tax: response to accounting changes for insurance contracts

As announced at Autumn Budget 2021, legislation will be introduced in Finance Bill 2021-22 to give the government the power to make regulations in response to the new International Financial Reporting Standard (IFRS) 17, so that the transitional impacts of IFRS 17 on insurance companies can be spread for tax purposes. It will also give the government the power to revoke the requirement for life insurance companies to spread acquisition expenses over seven years for tax purposes.

A consultation to inform the changes will be published later this year.

This is an enabling power that will have effect from the date of Royal Assent to Finance Bill 2021-22.

The Response to accounting changes for insurance contracts tax information and impact note provides more information.

1.18 Taxation of securitisations and insurance linked-securities

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to introduce a power enabling HM Treasury to make Stamp Duty and Stamp Duty Reserve Tax changes in relation to securitisation and insurance-linked securities arrangements by secondary legislation. The measure will take effect from Royal Assent to Finance Bill 2021-22.

The Taxation of securitisations and insurance linked-securities tax information and impact note provides more information.

1.19 Hybrid and other mismatches

As announced on 20 July 2021, the government will legislate in Finance Bill 2021-22 to amend the corporation tax legislation containing the rules for hybrid and other mismatches. The change is relevant to payments made to hybrid entities and ensures a proportionate outcome when the relevant entities are seen as transparent in their home jurisdiction.

The Hybrids: Transparent Entities tax information and impact note provides more information including details on commencement.

1.20 Tonnage Tax Reform

As announced at Autumn Budget 2021, the government will introduce a package of measures to reform the UK’s tonnage tax regime.

The government will legislate in Finance Bill 2021-22 to reduce the lock-in period for tonnage tax participants from ten to eight years, enable HMRC to admit companies into the regime outside of the initial window of opportunity where there is a good reason, and remove the consideration of flags from EU and EEA countries.

HMRC will review guidance to reflect the significance of flagging vessels in the UK and UK investment in decarbonisation and pollution control when they assess which companies can participate in the regime. HMRC will also review guidance on what vessels and operations qualify for the regime to take account of developments in technology and the shipping market since the tax was introduced. Finally, following a review aimed at smoothing administration, HMRC practice guidance will raise from 10% to 15% the permitted limit for qualifying secondary (ancillary, passenger-related) income. These tax changes will take effect in April 2022.

The government will explore how best to make use of existing powers regarding the training commitment, to ensure it works for firms and cadets across the maritime sector. The government will also review whether to include ship management within scope of the tonnage tax regime, and whether the existing limit that can be claimed in capital allowances by organisations leasing ships to tonnage tax participants remains appropriate.

The Tonnage Tax reform tax information and impact note provides more information.

1.21 Real Estate Investment Trusts (REITs)

As announced on 20 July 2021, the government will legislate in Finance Bill 2021-22 to make changes to the rules applying to real estate investment trusts (REITs). The changes remove certain constraints and administrative burdens which are no longer necessary.

Draft legislation was published on 20 July 2021. In response to feedback from stakeholders, certain technical changes have been made to the draft legislation to ensure the rules work as intended. These changes will have effect from 1 April 2022.

The Real Estate Investment Trusts (REITs): Amendments tax information and impact note provides more information.

1.22 Amendment to the reform of loss relief rules for corporation tax

The government will legislate in Finance Bill 2021-22 to amend the loss relief rules to ensure that the legislation continues to work as intended for companies adopting International Financial Reporting Standard (IFRS) 16. The changes will have retrospective effect from 1 January 2019.

The Amendment to the reform of loss relief rules for Corporation Tax tax information and impact note provides more information.

Capital Allowances

1.23 Annual Investment Allowance extension

The government will legislate in Finance Bill 2021-22 to extend the temporary £1,000,000 level of the Annual Investment Allowance until 31 March 2023.

The Annual Investment Allowance extension tax information and impact note provides more information.

1.24 Vehicle taxation: technical amendments regarding vehicle emission certification

The government will legislate in Finance Bill 2021-22 to amend capital allowances, Company Car Tax (CCT) and Vehicle Excise Duty (VED) legislation so that the tax system continues to function as intended where vehicles have been certified through the new comprehensive vehicle type approval scheme due to be introduced in 2022.

For capital allowances, the legislation will also confirm the applicable carbon dioxide emissions figure to be used as that arising from the Worldwide Harmonised Light Vehicle Test Procedure. For capital allowances and CCT, the legislation will take effect following Royal Assent and apply retrospectively. For VED the relevant legislation will take effect from 3 November 2021.

The Technical amendments regarding vehicle emission certification tax information and impact note provides more information including details on commencement.

Indirect Tax

1.25 Landfill Tax: rates for 2022 to 2023

As announced at Spring Budget 2021, the government will legislate in Finance Bill 2021-22 to increase the standard and lower rates of Landfill Tax in line with Retail Price Index (RPI), rounded to the nearest 5 pence. The changes will have effect from 1 April 2022, as set out in Annex A.

The Landfill Tax rates for 2022 to 2023 tax information and impact note provides more information.

1.26 Gaming Duty

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to raise the gross gaming yield (GGY) bandings for gaming duty in line with RPI. The revised GGY bandings used to calculate gaming duty must be used for accounting periods beginning on or after 1 April 2022. The GGY bandings are published in Annex A.

The Gaming Duty: Increase in casino gross gaming yield bands from April 2022 tax information and impact note provides more information.

1.27 Changes to rebated diesel and biofuels from 1 April 2022

The government will legislate in Finance Bill 2021-22 to make technical amendments to the legislation that restricts use of rebated (red) diesel and rebated biofuels from 1 April 2022, to ensure it operates as intended.

The changes amend provisions relating to: certain vehicles, machines and appliances; restrictions on the use of red diesel and rebated biofuels; and travelling fairs and circuses.

They also make changes to the circumstances in which the use of red diesel and rebated biofuels will be permitted, including provisions aimed at the transition to the new rules.

The Changes to rebated diesel and biofuels from 1 April 2022 tax information and impact note provides more information.

1.28 Vehicle Excise Duty (VED): rates for cars, vans, and motorcycles

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to increase VED rates for cars, vans, motorcycles, and motorcycle trade licences by RPI with effect from 1 April 2022. VED rates are set out in Annex A.

The Vehicle Excise Duty rates for cars, vans, and motorcycles from April 2022 tax information and impact note provides more information.

1.29 Vehicle Excise Duty (VED) and Levy rates for heavy goods vehicles (HGVs)

As announced at Autumn Budget 2021, the government will continue to freeze HGV VED for 2022 to 2023 and will continue to suspend the HGV Levy for another 12 months from 1 August 2022.

The Heavy goods vehicle (HGV) levy suspension tax information and impact note provides more information.

1.30 Temporary extension to road haulage cabotage

The government will legislate in Finance Bill 2021-22 to amend Vehicle Excise Duty (VED) legislation to allow, until 30 April 2022, unlimited cabotage movements of heavy goods vehicles (HGVs) within Great Britain for up to 14 days after arriving in the United Kingdom on a laden international journey, without these operators needing to pay VED. The legislative change will take affect from 28 October 2021.

The Temporary extension to road haulage cabotage tax information and impact note provides more information.

1.31 Tobacco duty rates

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to:

  • increase the duty rates for all tobacco products by the tobacco duty escalator of 2% above inflation (based on RPI)
  • increase the rate for hand-rolling tobacco by an additional 4% above the escalator, to 6% above inflation (based on RPI)
  • increase the Minimum Excise Tax (MET) by an additional 1% above the escalator, to 3% above inflation (based on RPI)

The changes will take effect from 6pm on 27 October 2021.The rates and updated MET level are set out in Annex A.

The Changes to tobacco duty rates tax information and impact note provides more information.

1.32 Tobacco products: tracing and security

As announced at Budget 2020, the government will legislate in Finance Bill 2021-22 to introduce tougher sanctions to tackle tobacco duty evasion. These sanctions will be linked to the Tobacco Track and Trace System (TTS), with enforcement by HMRC and Trading Standards. The new powers will allow HMRC to:

  • issue penalties of up to £10,000 for failure to comply with TTS requirements
  • make liable to forfeiture TTS compliant product that is found alongside product that does not comply with TTS requirements
  • exclude retailers from TTS on a temporary or permanent basis
  • extend TTS enforcement powers to Trading Standards by way of future regulations
  • make future administrative amendments to TTS regulations

The Tobacco Products: tracing and security tax information and impact note provides more information.

1.33 Plastic Packaging Tax amendments

The government will legislate in Finance Bill 2021-22 to make amendments to the Plastic Packaging Tax legislation contained within Part 2, Schedule 9 and Schedule 13 of Finance Act 2021. The changes will ensure that the tax operates as intended, that the UK complies with international agreements, and that HMRC has the appropriate framework to administer the tax.

The Plastic Packaging Tax amendments tax information and impact note provides more information.

1.34 Implementation of VAT rules in free zones

The government will legislate in Finance Bill 2021-22 to introduce additional elements to the VAT free zone model for Freeports.

The legislation will:

  • implement a free zone exit charge to ensure businesses do not gain an unintended tax advantage from the zero-rate in the free zone model
  • make amendments to existing VAT law to ensure free zone rules and warehousing rules are mutually exclusive
  • amend some parts of historic free zone legislation which are incompatible with the new free zone VAT rules

The measure will take effect from 3 November 2021.

The Implementation of VAT rules in free zones tax information and impact note provides more information.

1.35 Excise Duties: Extending Schedule 41 Finance Act 2008 penalties to free zones and registered consignors for authorised use

The government will legislate in Finance Bill 2021-22 to amend Schedule 41 to the Finance Act 2008. This will apply the excise wrongdoing penalty regime where breaches relating to excise goods occur in the free zone procedure or the authorised use procedure for registered consignors.

This will allow the Schedule 41 penalties to be applied to businesses and individuals who fail to comply with obligations or terms and conditions imposed while goods are subject to the free zone procedure and authorised use procedure. These changes will come into force on 3 November 2021.

The Excise Duties: extending Schedule 41 Finance Act 2008 penalties to free zones and registered consignors for authorised use tax information and impact note provides more information.

1.36 VAT: Exemption for dental prostheses imports

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to extend the current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals or dental technicians to imports of dental prostheses by these persons. This will ensure the VAT treatment for such prostheses supplied into and within the United Kingdom, including between Great Britain and Northern Ireland, is consistent. This measure will take effect on or after the date of Royal Assent of Finance Bill 2021 and will apply retrospectively from 1 January 2021.

The VAT Exemption for dental prostheses imports tax information and impact note provides more information.

1.37 Northern Ireland second-hand margin scheme — interim arrangement

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to extend the VAT margin scheme to apply in Northern Ireland on a limited basis in respect of motor vehicles sourced from Great Britain for the period until the Second-hand Motor Vehicle Export Refund Scheme is implemented. As a result, motor vehicles first registered in the United Kingdom prior to 1 January 2021 will be available to sell under the VAT margin scheme in Northern Ireland during that time period.

This measure would take effect should a relevant agreement be reached with the EU and will apply retrospectively from 1 January 2021.

The Northern Ireland second-hand margin scheme interim arrangement tax information and impact note provides more information.

1.38 Second-hand Motor Vehicle Export Refund Scheme

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to be able to introduce a Second-hand Motor Vehicle Export Refund Scheme. Businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export.

This will ensure that Northern Ireland motor vehicle dealers will remain in a comparable position as those applying the VAT margin scheme elsewhere in the UK. Further details regarding the arrangements of the scheme will be provided in due course, including any regulations bought forward to give it effect.

The Second-hand Motor Vehicle Export Refund Scheme tax information and impact note provides more information.

1.39 Insurance Premium Tax: Identifying where the risk is situated

As announced on 20 July 2021, the government will legislate in Finance Bill 2021-22 to set out the criteria for determining the location of risk for Insurance Premium Tax (IPT) in legislation. This will provide clarity, as well as ensuring that the risks located outside the UK remain exempt from UK IPT. Following a technical consultation on the draft legislation, amendments were made to ensure continuity of treatment. This measure will have effect from the date of Royal Assent to Finance Bill 2021-22.

The Insurance Premium tax- Identifying where the risk is situated tax information and impact note provides more information.

Property Tax

1.40 Residential Property Developer Tax

As announced on 10 February 2021, the government will legislate in Finance Bill 2021-22 to introduce a new tax on company profits derived from UK residential property development. The tax will be charged at 4% on profits exceeding an annual allowance of £25 million and will be included in the corporation tax returns of those companies liable to the new tax.

Following a consultation on the design launched in April 2021, and a technical consultation on the draft legislation on 20 September 2021, the government published a consultation response at Autumn Budget 2021. The changes will take effect from 1 April 2022 for relevant profits arising on or after this date.

The Residential Property Developer Tax tax information and impact note provides more information.

1.41 Capital Gains Tax payment on property disposal time limit extension

The government will legislate in Finance Bill 2021-22 to extend the deadline for residents to report and pay Capital Gains Tax (CGT) payment after selling UK residential property will increase from 30 days after completion to 60 days. For non-UK residents disposing of property in the UK, this deadline will also increase from 30 days to 60 days.

This will ensure that taxpayers have sufficient time to report and pay CGT, as recommended by the Office of Tax Simplification. When mixed-use property is disposed of by UK residents, legislation will also clarify that the 60 day payment window will only apply to the residential element of the property gain.

The Capital Gains Tax payment on property disposal time limit extension tax information and impact note provides more information.

Tax administration and other measures

1.42 Economic Crime (Anti-Money Laundering) Levy

Following a consultation announced at Budget 2020, the government will legislate in Finance Bill 2021-22 to establish an Economic Crime (Anti-Money Laundering) Levy. On 21 September 2021, the government published draft legislation on the Economic Crime (Anti Money Laundering) Levy to raise approximately £100 million per annum to help fund anti-money laundering and economic crime reforms.

Entities subject to the Money Laundering Regulations will pay the levy as a fixed fee based on the ‘size’ band they belong to, as determined by their UK revenue for the relevant accounting period: medium (more than £10.2 million but not more than £36 million); large (more than £36 million but not more than £1 billion); very large (more than £1 billion). Higher bands will pay higher fees, whilst small entities (UK revenue for the relevant accounting period is less than £10.2 million) are fully exempt from the levy.

HMRC, the Financial Conduct Authority, and the Gambling Commission will be responsible for the collection and management of the levy.

In scope entities will first be charged the levy during the year 1 April 2022 to 31 March 2023. The first payments of the levy will only be due after that year ends. This means the first set of levy payments will not be made until the year 2023 to 2024 (running 1 April 2023 to 31 March 2024).

The Economic Crime (Anti-Money Laundering) Levy tax information and impact note provides more information.

1.43 Clamping down on promoters of tax avoidance

As announced in the government’s Tax Policies and Consultations Command Paper published on 23 March 2021, and following consultation, the government will legislate in Finance Bill 2021-22 for further measures to clamp down on promoters of tax avoidance.

The legislation, which will take effect following Royal Assent of Finance Bill 2021-22, will:

  • allow HMRC to freeze a promoter’s assets so that the penalties they are liable for are paid
  • deter offshore promoters by introducing a new penalty on the UK entities that support them
  • provide for the closing down of companies and partnerships that promote tax avoidance schemes
  • support taxpayers to steer clear of avoidance schemes or exit avoidance quickly by sharing more information on promoters and their schemes

The Clamping down on promoters of tax avoidance tax information and impact note provides more information.

1.44 Discovery Assessments

The government will legislate in Finance Bill 2021-22 to put beyond doubt that HMRC may use its “discovery” assessing powers to recover certain tax charges including the High Income Child Benefit Charge (HICBC), those relating to Gift Aid Donations and a number of pension charges. This measure will apply prospectively and retrospectively to provide certainty that HMRC may use section 29(1)(a) of the Taxes Management Act 1970 as designed and intended, following recent challenges before the courts that previously issued assessments were invalid. The measure does not create any new or additional obligations or liabilities for taxpayers. It clarifies the legislation to ensure the rules work as designed and intended. The measure also makes some minor technical changes to ensure the requirement for an individual to notify chargeability to income tax works as intended.

The Discovery Assessments tax information and impact note provides more information.

1.45 Dormant Assets Scheme expansion

As announced in the government’s Tax Policies and Consultations Command Paper published on 23 March 2021, the government will legislate in Finance Bill 2021-22 to amend tax legislation to assist with the expansion of the Dormant Assets Scheme. The change will take effect once the Dormant Assets Bill becomes law and the necessary commencement order has been made. 

The Dormant Assets Scheme Expansion tax information and impact note provides more information.

1.46 Notification of uncertain tax treatment by large businesses

As announced on 20 July 2021, the government will legislate in Finance Bill 2021-22 to introduce a new requirement for large businesses to notify HMRC when they take a tax position in their returns for VAT, corporation tax, or income tax (including PAYE) that is uncertain.

Uncertain amounts are defined by reference to two criteria: that a provision has been made in the accounts for the uncertainty, or that the position taken by the business is contrary to HMRC’s known interpretation (as stated in the public domain or in dealings with HMRC).

The government is committed to further consideration of a future third trigger (where there is a substantial possibility that a tribunal or court would find the taxpayer’s position to be incorrect). Taxpayers need to notify HMRC only where the tax advantage is expected to be over £5m for a 12-month period.

A summary of responses following consultation with stakeholders was published on 20 July 2021. The legislation will be effective from 1 April 2022.

The Notification of uncertain tax treatment by large businesses tax information and impact note provides more information.

1.47 Power to make temporary modifications of taxation of employment income

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2021-22 to grant HM Treasury the power to make regulations, under ministerial direction, to provide income tax and National Insurance contributions (NICs) relief on specific employee expenses or benefits-in-kind, in the event of a disaster or emergency of national significance.

The Power to make temporary modifications of taxation of employment income tax information and impact note provides more information.

1.48 Introduction of public notice powers for non-duty tariff changes

The government will legislate to amend the Taxation (Cross-border Trade) Act 2018 so that technical updates to tariff legislation, which do not alter the rate of an import duty, will be made by public notice instead of by regulations.

This measure will ensure routine technical changes to the UK’s tariff schedule will be implemented more quickly, which may benefit stakeholders who refer to tariff legislation for information. The measure will have effect from the date of Royal Assent to Finance Bill 2021-22.

The Introduction of public notice powers for non-duty tariff changes tax information and impact note provides more information.

1.49 Trade Remedies: Department for International Trade Secretary of State call in power

As announced by the Secretary of State for International Trade on 25 October 2021, the government will legislate in Finance Bill 2021-22 for a mechanism to be established for the Secretary of State for International Trade to ‘call in’ trade remedies transition reviews and transition review reconsiderations conducted by the Trade Remedies Authority under the existing system.

The Amendments to the trade remedies legislative regime to allow for a Secretary of State for International Trade call in power tax information and impact note provides more information.

1.50 Increasing independent representation on the Office of Tax Simplification (OTS) Board

The government will legislate in Finance Bill 2021-22 to increase the maximum independent representation on the Office of Tax Simplification (OTS) Board by two members, to a total overall membership of ten. The conclusions of HM Treasury’s Review of the OTS will be published in due course.

Chapter 2 — Measures announced at Autumn Budget 2021 but not in Finance Bill 21-22

Personal Tax

2.1 Individual Savings Account (ISA) annual subscription limit

As announced at Autumn Budget 2021, the adult ISA annual subscription limit for 2022 to 2023 will remain unchanged at £20,000. This measure will apply to the whole of the UK.

2.2 Junior Individual Savings Account (ISA) annual subscription limit

As announced at Autumn Budget 2021, the annual subscription limit for Junior ISAs for 2022 to 2023 will remain unchanged at £9,000. This measure will apply to the whole of the UK.

2.3 Child Trust Funds annual subscription limit

As announced at Autumn Budget 2021, the annual subscription limit for Child Trust Funds for 2022 to 2023 will remain unchanged at £9,000. This measure will apply to the whole of the UK.

2.4 Van benefit charge and fuel benefit charges for cars and vans from 6 April 2022

As announced at Autumn Budget 2021, the government will increase the van benefit charge and the car and van fuel benefit charges by the September 2021 Consumer Price Index. The change will have effect from 6 April 2022. The government will legislate by Statutory Instrument to ensure the changes are reflected in tax codes for 2022 to 2023.

The Van benefit charge and fuel benefit charges for cars and vans from 6 April 2022 tax information and impact note provides more information.

2.5 Pensions Tax Relief Administration: Top-up for low earners in Net Pay Arrangements

As announced at Autumn Budget 2021, and following the response to call for evidence on Pensions Tax Relief Administration (published at Autumn Budget 2021), the government will introduce legislation in a future Finance Bill to make top-up payments directly to low-earning individuals saving in a pension scheme using a Net Pay Arrangement.

These top-ups will start to be paid from 2025 to 2026 in respect of contributions made in 2024 to 2025 onwards and will help to better align outcomes with equivalent individuals saving into pension schemes using relief at source.

2.6 Clarification of income tax treatment of Household Support Fund payments

As announced at Autumn Budget 2021, the government will legislate in Spring 2022 by Statutory Instrument to clarify that payments made through the Household Support Fund, and through similar schemes in the devolved administrations, will be exempt from income tax.

The Household Support Fund is a £500m fund to help vulnerable households with essentials over the coming months, as the country continues its recovery from the COVID-19 pandemic. HMRC will not collect any income tax that may be due on payments made from October 2021 to the date the legislation takes effect.

2.7 National Insurance contributions rates and thresholds

As announced at Autumn Budget 2021, the government will use the September Consumer Prices Index (CPI) figure of 3.1% as the basis for uprating National Insurance limits and thresholds, and the rates of Class 2 and 3 National Insurance contributions, for 2022 to 2023.

This excludes the Upper Earnings Limit and Upper Profits Limit which will be maintained at 2021 to 2022 levels, in line with the higher rate threshold for income tax.

The government will legislate for these changes via a Statutory Instrument ahead of the start of the tax year.

2.8 Health and Social Care Levy

As announced on 7 September 2021, the government has legislated for a new 1.25% Health and Social Care Levy (the Levy), to fund an historic investment in the NHS and social care. The Levy will apply UK-wide, to the same population and income as Class 1 (employee, employer) and Class 4 (self-employed) National Insurance contributions, and to the main and additional National Insurance contribution rates.

The Levy will not apply to Class 2 or Class 3 National Insurance contributions. The Levy will take effect from April 2022, when National Insurance contributions for working age employees, self-employed people and employers will increase by 1.25%.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to income from employment or self-employment of individuals working above State Pension age, and National Insurance contribution rates will return to their 2021 to 2022 levels.

Corporate Tax

2.9 Research & Development (R&D) tax relief reform

Following the consultation launched at Spring Budget 2021, as announced at Autumn Budget 21, R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud costs, to more effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK, and to target abuse and improve compliance. These changes will be legislated for in Finance Bill 2022-23 and take effect from April 2023. Further details of these changes and next steps for the review will be set out in due course.

2.10 Re-domiciliation regime

As announced at Autumn Budget 2021, the government intends to make it possible for companies to move their domicile to and relocate to the UK by enabling the re-domiciliation of companies. The government published a consultation on its proposals at Autumn Budget 2021.

2.11 Online Sales Tax

As announced at Autumn Budget 2021, the government will consult shortly on an Online Sales Tax. The consultation will explore the arguments for and against the introduction of an Online Sales Tax.

Indirect Tax

2.12 Landfill Tax: rates for 2023 to 2024

As announced at Autumn Budget 2021, the government will legislate in Finance Bill 2022-23 to increase the standard and lower rates of Landfill Tax in line with RPI, rounded to the nearest 5 pence. The changes will have effect from 1 April 2023.

The rates of Landfill Tax from 1 April 2021 are set out in Annex A.

2.13 Landfill Communities Fund value

As announced at Autumn Budget 2021, the government will set the value of the Landfill Communities Fund for 2022 to 2023 at £30.8 million, with the cap on contributions by landfill operators remaining at 5.3% of their Landfill Tax liability.

2.14 Carbon Price Support rates for 2023 to 2024

As announced at Autumn Budget 2021, the government will freeze the Carbon Price Support (CPS) rate per tonne of carbon dioxide (CO2) emitted at £18 for 2023 to 2024, in Great Britain. This further extends the rate freeze introduced from 1 April 2016.

The rates for CPS from 1 April 2023 are set out in Annex A.

2.15 Aggregates Levy rate for 2022 to 2023

As announced at Autumn Budget 2021, the government will freeze the Aggregates Levy rate in 2022 to 2023 but intends to return the levy to index-linking in the future.

Aggregates Levy rates are set out in Annex A.

2.16 Fuel duty rates for 2022 to 2023

As announced at Autumn Budget 2021, fuel duty rates will remain frozen for 2022 to 2023.

The rates are set out in Annex A.

2.17 Alcohol duty rates freeze

As announced at Autumn Budget 2021, the government will freeze all alcohol duty rates. There will be no revisions to existing legislation and no new legal provisions will be introduced.

Alcohol duty rates and allowances are set out at Annex A.

2.18 Alcohol Duty reform

As announced at Autumn Budget 2021, the government has published a consultation on its detailed proposals for alcohol duty reform. This builds on the findings of the previous call for evidence, held in Autumn 2020, the response to which has been published alongside the consultation. The consultation will close on 30 January 2022.

2.19 Air Passenger Duty

As announced at Autumn Budget 2021, from 1 April 2023 the government will introduce a new domestic band for Air Passenger Duty (APD), covering flights within the UK, to support UK connectivity. In addition, the government will introduce a new ultra long-haul band, covering destinations with capitals located more than 5,500 miles from London to align APD more closely with the government’s environmental objectives.

For the tax year 2023 to 2024, the rates for domestic flights will be £6.50 for those travelling in economy class, £13 for those travelling in all other classes, and £78 for those travelling on aircraft with an authorised take-off weight of 20 tonnes or more with fewer than 19 seats.

The rates for the short and long-haul bands will increase in line with RPI, meaning a real terms freeze. The economy rate for the ultra long-haul band will be set at £91, £4 greater than the long-haul band, £200 for those travelling in all other classes and £601 for those travelling on aircraft with an authorised take-off weight of 20 tonnes or more with fewer than 19 seats.

These changes take effect from 1 April 2023. The full list of APD rates are set out in Annex A.

2.20 VAT treatment of fund management fees

As announced at Autumn Budget 2021, the government will consult on options to simplify the VAT treatment of fund management fees.

Property Tax

2.21 Annual Tax on Enveloped Dwellings (ATED): annual chargeable amounts for 2022 to 2023 chargeable period

The ATED charges increase automatically each year in line with inflation. The ATED annual charges will rise by 3.1% from 1 April 2022 in line with the September 2021 Consumer Price Index.

Tax Administration and other measures

2.22 Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)

As announced on 23 September 2021, the government will give sole traders and landlords with income over £10,000 an extra year to prepare for Making Tax Digital.

MTD for ITSA will now be introduced from 6 April 2024. General partnerships will not be required to join MTD for ITSA until 6 April 2025.

2.23 Reform of penalties for late submission and late payment of tax for ITSA

As announced on 23 September 2021, the new penalties for the late submission and late payment of tax for ITSA will now come into effect on 6 April 2024 for taxpayers in ITSA who are required to submit digital quarterly updates through MTD, and 6 April 2025 for all other ITSA taxpayers.

The new late submission and late payment penalties for VAT will still come into effect for VAT registered businesses from accounting periods starting on or after 1 April 2022, as announced at Spring Budget 2021.

Table 1: Unchanged measures

This table lists measures which are part of Finance Bill 2021-22 where draft legislation was published for consultation on 20 July 2021 and where the draft legislation is unchanged.

Capital Allowances

Amendment to Allowance Statement Requirements for Structures and Buildings Allowance

Tax Administration and other measures

Powers to tackle electronic sales suppression

Table 2: Measures in this document without a corresponding announcement in the Budget report

Measure title Paragraph number
Income tax Charge and Rate 1.1
Increasing Normal Minimum Pension Age 1.5
Taxation of public service pension reform remedy 1.6
Diverted Profits Tax: giving effect to Mutual Agreement Procedure decisions 1.14
Diverted Profits Tax: interaction with corporation tax closure notices and amendment to relieving provisions 1.15
Hybrid and other mismatches 1.19
Amendment to the reform of loss relief rules for corporation tax 1.22
Vehicle taxation: technical amendments regarding vehicle emission certification 1.24
Landfill Tax: rates for 2022 to 2023 1.25
Tobacco products: tracing and security 1.32
Plastic Packaging Tax Amendments 1.33
Implementation of VAT rules in free zones 1.34
Excise Duties: Extending Schedule 41 Finance Act 2008 penalties to free zones and registered consignors for authorised use 1.35
Insurance Premium Tax: Identifying where the risk is situated 1.39
Economic Crime (Anti-Money Laundering) Levy 1.42
Discovery Assessments 1.44
Dormant Assets Scheme Expansion 1.45
Notification of uncertain tax treatment by large businesses 1.46
Introduction of public notice powers for non-duty tariff changes 1.48
Trade Remedies: DIT Secretary of State call in power 1.49
Landfill Tax: rates for 2023 to 2024 2.12
Landfill Communities Fund Value 2.13
Annual Tax on Enveloped Dwellings (ATED): annual chargeable amounts for 2022 to 2023 chargeable period 2.21