This week’s Autumn Budget confirmed the introduction of a number of new taxes, most of which had been pre-announced. The new 4% tax charge on residential property development companies will start from 1 April 2022, and the health and social care levy changes will begin (via temporary increases in NIC rates) from 6 April 2022. Economic crime levy will also cover the financial year to 31 March 2023 with the first payments due in the following financial year. The UK government will also consult on a new online sales tax, the revenues from which would be used to reduce business rates for bricks and mortar retailers.
This brings the tally of new taxes introduced or planned since 2000 to 21, says the CIOT (including bank payroll tax and the loan charge, but excluding devolved taxes and excise duties) – noting that no taxes have been abolished over the same period.
The CIOT urges caution on new taxes, pointing out that half a dozen new taxes introduced over two years does nothing for tax simplification. As John Cullinane, CIOT Director of public policy points out:
‘While some of these new taxes are niche measures that will be paid only by a small number of large businesses, the new Health and Social Care Levy will be paid by millions. By being established separately from National Insurance, and with slightly different rules, it represents an unnecessary further complication of the tax system, straining scarce IT and other resources at a time when HMRC’s services to taxpayers and their agents are already under severe strain. Presumably the government preferred to pay this price for the appearance of creating a new tax rather than of increasing rates of an existing one.’
The CIOT also welcomes the 1.2% per year real-terms increase in departmental funding for HMRC as ‘better than nothing’ but falling short of what might well be required to deliver new services under significant pressure – with making tax digital for income tax (and later corporation tax) on the horizon, alongside basis period reform for unincorporated businesses, the management of new taxes and the continuing development of new customs arrangements.
Cullinane sums up: ‘The importance of delivering good customer service must not be lost amid the transformative ambitions set out in the spending review.’
The Treasury may take consolation in the transition to the pillar one approach to taxation of the digital economy, which will eventually remove the UK’s digital services tax from the list of 21.
The CIOT's full list of new taxes introduced by the UK government since 2000 (or planned) is as follows:
climate change levy – 2001;
aggregates levy – 2002;
stamp duty land tax (stamp duty on property) – 2003;
pre-owned assets tax – 2005;
non-domicile levy – 2008;
community infrastructure levy – 2008;
bank payroll tax (also known as bankers bonus tax) – 2009 (a one off tax);
bank levy – 2011;
annual tax on enveloped dwellings – 2013;
high income child benefit charge – 2013;
diverted profits tax – 2015;
apprenticeship levy – 2017;
soft drinks industry levy – 2018;
loan charge – 2019 (one-off tax);
digital services tax – 2020;
plastic packaging tax - 2022;
health and social care levy – 2022;
building safety levy (being legislated for in current Building Safety Bill);
residential property developer tax (to be legislated for in Finance Bill 2021/22);
economic crime levy (to be legislated for in Finance Bill 2021/22); and
This week’s Autumn Budget confirmed the introduction of a number of new taxes, most of which had been pre-announced. The new 4% tax charge on residential property development companies will start from 1 April 2022, and the health and social care levy changes will begin (via temporary increases in NIC rates) from 6 April 2022. Economic crime levy will also cover the financial year to 31 March 2023 with the first payments due in the following financial year. The UK government will also consult on a new online sales tax, the revenues from which would be used to reduce business rates for bricks and mortar retailers.
This brings the tally of new taxes introduced or planned since 2000 to 21, says the CIOT (including bank payroll tax and the loan charge, but excluding devolved taxes and excise duties) – noting that no taxes have been abolished over the same period.
The CIOT urges caution on new taxes, pointing out that half a dozen new taxes introduced over two years does nothing for tax simplification. As John Cullinane, CIOT Director of public policy points out:
‘While some of these new taxes are niche measures that will be paid only by a small number of large businesses, the new Health and Social Care Levy will be paid by millions. By being established separately from National Insurance, and with slightly different rules, it represents an unnecessary further complication of the tax system, straining scarce IT and other resources at a time when HMRC’s services to taxpayers and their agents are already under severe strain. Presumably the government preferred to pay this price for the appearance of creating a new tax rather than of increasing rates of an existing one.’
The CIOT also welcomes the 1.2% per year real-terms increase in departmental funding for HMRC as ‘better than nothing’ but falling short of what might well be required to deliver new services under significant pressure – with making tax digital for income tax (and later corporation tax) on the horizon, alongside basis period reform for unincorporated businesses, the management of new taxes and the continuing development of new customs arrangements.
Cullinane sums up: ‘The importance of delivering good customer service must not be lost amid the transformative ambitions set out in the spending review.’
The Treasury may take consolation in the transition to the pillar one approach to taxation of the digital economy, which will eventually remove the UK’s digital services tax from the list of 21.
The CIOT's full list of new taxes introduced by the UK government since 2000 (or planned) is as follows:
climate change levy – 2001;
aggregates levy – 2002;
stamp duty land tax (stamp duty on property) – 2003;
pre-owned assets tax – 2005;
non-domicile levy – 2008;
community infrastructure levy – 2008;
bank payroll tax (also known as bankers bonus tax) – 2009 (a one off tax);
bank levy – 2011;
annual tax on enveloped dwellings – 2013;
high income child benefit charge – 2013;
diverted profits tax – 2015;
apprenticeship levy – 2017;
soft drinks industry levy – 2018;
loan charge – 2019 (one-off tax);
digital services tax – 2020;
plastic packaging tax - 2022;
health and social care levy – 2022;
building safety levy (being legislated for in current Building Safety Bill);
residential property developer tax (to be legislated for in Finance Bill 2021/22);
economic crime levy (to be legislated for in Finance Bill 2021/22); and
