Introduction

 

Budget Statements are increasingly used to bring together policy announcements that involve public or stakeholder consultation.

To assist Institute members and others ensure that they are aware of consultations that may affect them, this Paper highlights references from the 2008 Budget Statement.

It is in two sections:-

1. A list of forthcoming consultations identified from the Budget
2. An appendix showing the context in which the consultations appeared in the Budget statement

This paper was prepared by Rhion Jones and Martin Woodrow

List of forthcoming consultations identified from

Budget 2008 statement

(Please note that government departments named are based on our working assumptions of who will be the consultors)

1. Zero Carbon (Non-domestic buildings) –  Treasury or Defra

2. Enterprise Investment Scheme (EIS Simplification) –  Treasury

3. Taxation of foreign profits –  Treasury

4. VAT simplification –  Treasury

5. Regional Competitiveness – CLG / BERR

6. Tax treatment of dividends – Treasury

7. Charity donors and anti-avoidance legislation – Treasury

8. Harmonisation of interest on overdue tax –  Treasury

9. Saving gateway – Treasury

10. National Insurance contributions collection re. self-employed – Treasury

11. Taxpayers Charter – HMRC

12. Late filing of tax returns – Treasury

13. Stamp duty land tax regulation – Treasury

14. 14. Integrated and economic spatial strategies – Treasury / CLG

15. Remediation Relief re. Brownfield land developments – CLG

16. Community Infrastructure Levy (CIL) regulation – CLG

17. EU Emissions Trading – Phase 3 – Defra

18. Reform of the Bus Subsidy – DoT

19. Renewal Energy – Defra

20. Support for microgeneration – Treasury

21. Carbon Capture & Storage (CCS) – BERR

22. Single-use carrier bags – tax relief re. charitable causes – Treasury

 

Appendix

The following show the context in which consultations were mentioned in the

Budget Statement, chapter by chapter.

To assist users we have used colour-coding as follows:-

Consultation  Future consultation Consultation  Previous consultation Consultation  In progress

Chapter 1  Overview

There is an ambition for all new non-domestic buildings to be zero carbon from

2019 with consultation at the timeline and its feasibility and new public sector buildings from 2018.

Chapter 2  Maintaining macroeconomic stability

No References

Chapter 3  Sustainable growth and prosperity

At this time it is even more important for Government to provide a stable policy framework within which business can plan ahead. Evidence shows that the UK is one of the best places in the world to do business. The Government will maintain an environment that encourages investment and growth. Where policy change is necessary to reflect changing circumstances, the Government is committed to work in partnership with business to ensure that policy is responsive to business needs and objectives. As an important part of this, it will continue to consult business wherever possible, building on the increased number of tax consultations over the past year, and will maintain its consultative groups to discuss tax issues with business representatives.

There will be an increase in the investor limit of the Enterprise Investment Scheme (EIS) from £400,000 to £500,000 (subject to state aid approval) and a consultation on how best to simplify the operation of the scheme.

There will be a consultation on the introduction of regulatory budgets, which would cap the new, annually-recurring cost of regulation for business, including whether to pilot this approach for SMEs or a particular sector;

Following extensive consultation on its implementation, the major package of business tax reforms announced in Budget 2007 will take effect from April

2008. 2008. The reduction in the main rate of Corporation Tax (CT) to 28 per cent will deliver the lowest ever rate in the UK and the lowest in the G7, improving

competitiveness and encouraging investment. The reforms to the capital

allowances system will improve economic efficiency by removing distortions to investment decisions. Budget 2008 announces, in response to consultation:

• • the 10 per cent rate of allowance for the new classification of integral features of buildings will apply to both initial and replacement expenditure,

from April 2008; and

• a measure to allow over 500,000 businesses to write-off small, unrelieved capital allowances pools.

Following last spring’s discussion document on the taxation of foreign profits, the Government has been engaged in a constructive, ongoing dialogue with business. Budget 2008 announces that the Government will bring forward proposals and publish a consultation document before summer 2008. The objective of any reform is to enhance the competitiveness of the UK tax framework, while being broadly revenue neutral.

Following the publication of the consultation document Securing a sustainable future in December 2007, Budget 2008 announces reforms to the North Sea fiscal regime. These include changes to the treatment of CT losses created by decommissioning, extension of 100 per cent capital allowances to long-life assets and mid-life decommissioning, and reforms to Petroleum Revenue Tax. These will encourage further investment in the UK Continental Shelf by providing certainty for investors, helping facilitate asset trade, and simplifying the regime. The Government will continue to engage with oil and gas stakeholders on outstanding issues.

VAT rules and administration: the Government will consult on simplifying the operation of the partial exemption regime and the capital goods scheme, and explore the need for business to seek permission from HMRC before taxing otherwise VAT-exempt supplies of land and property;

The Government is working closely with industry experts to frame and lead the international community’s response to the recent financial market disruption, and is consulting widely and actively on a considered and proportionate set of reforms to strengthen the resilience of the banking system while maintaining competitiveness. Budget 2008 extends collaboration with the establishment of an industry-led working group to examine proposals to improve the supply of mortgage funding. These actions build on the introduction of a new legislative framework for UK covered bonds.

Relating to Islamic finance – the Government aims to legislate, following consultation, in the Finance Bill 2009 to provide relief from stamp duty land tax (SDLT) for alternative finance investment bonds;

The Government will continue to examine the feasibility of a sovereign sukuk issue. It will also, in Finance Bill 2008, take legal powers to facilitate any future sovereign issuance, and provide a full response to the recently closed public consultation on sukuk issuance in the summer of 2008.

Enhancing the competitiveness of UK financial services – Recent steps to support competitiveness include: consulting on a Legislative Reform Order to modernise the governance arrangements of the Lloyd’s insurance market, complementing Lloyd’s own reforms and helping it continue to compete in the global insurance market;

Budget 2008 announces improvements to asset management taxation:

• following extensive consultation, launching a new tax regime for Property

Authorised Investment Funds on 6 April 2008;

The Government is taking steps towards modernising insurance taxation by:

• continuing the consultation on the taxation of general insurance reserves;

In England, The Review of sub-national economic development and regeneration set out a package of institutional reforms of regional, sub- regional and local governance and decision-making to enable every spatial area to improve its competitiveness and fulfil its economic potential. The Department for Business Enterprise and Regulatory Reform (BERR) and the Department for Communities and Local Government (CLG) will consult on implementing these reforms shortly.

Delivering Tax Simplification

Business

Modernising Pay As You Earn processes to simplify arrangements for all working students and reduce burdens on their employers. HMRC published a

consultation document on 20 February 2008;

Savings & Assets

The Government will be consulting this summer on simplifying and clarifying the tax treatment of dividends paid by Real Estate Investment Trusts (REITs) into Share Incentive Plans (SIPs).

Financial Sector

Following consultation, simplifying and clarifying aspects of the life insurance taxation system through a package of measures on funding rules, the tax

treatment of structural assets, rules on foreign currency assets, and the facilitation of transfers of business between friendly societies.

Charities

• following consultation, introducing a package of measures to make the Gift

Aid system easier to use, including simplifying record-keeping and auditing processes

• consulting with charities on anti-avoidance legislation relating to substantial donors to simplify the system for charities and prevent innocent transactions from being caught.

Modernising tax administration

• consulting later this year on how to harmonise and simplify the rules about interest on tax paid late and on repayments of tax overpaid, and
• following consultation and in the context of wider tribunal reform, announcing

streamlined and more consistent processes across taxes for reviewing decisions and handling appeals before they come before a tribunal.

Chapter 4  Fairness & opportunity for all

Following consultation, Ready for Work announced that, from October 2008, lone parents whose youngest child is aged 12 or over will lose eligibility to Income Support solely on the grounds of being a lone parent. They will move onto JSA, where they will be expected to actively seek work, or onto another benefit if appropriate for their circumstances.

The Saving Gateway is a cash saving scheme for those on lower incomes. Following the success of the pilots in promoting saving and financial inclusion, the Saving Gateway will be introduced nationally, with the first accounts available to savers in 2010. Individuals in receipt of the many benefits and tax credits will be entitled to open an account.

Accounts will be offered by financial institutions such as banks and building societies and will run for two years. At the end of the accounts, the Government will match (a contribution for each pound saved) money which people save into their Saving Gateway accounts. Third sector organisations such as credit unions, social housing providers and the Citizens Advice Bureau

have expressed interest in providing information and support on the scheme. A consultation document, The Saving Gateway: operating a national scheme, is published alongside Budget 2008.

To improve the present separate systems for collecting Class 2 and 4 national insurance contributions (NICs) from the self-employed, the Government is publishing a consultation document, Improving the collection of National Insurance Contributions from the self-employed, alongside Budget 2008.

Residence and domicile consultation

The package of changes to the rules on residence and domicile announced in the 2007 Pre-Budget Report was intended to strike the right balance between fairness and competitiveness. The special remittance basis rules, which help to attract international talent and investment, are important to UK competitiveness, but can only be sustainable in the longer term if they are fair. It is right that people who decide to make their home in this country should

pay their fair share of tax.

Having consulted on these proposals, the Government intends to implement the following changes from April 2008:

A taxpayers’ charter could play an important role in that relationship, setting out both rights and responsibilities in a single accessible document. The Government announced the start of work to develop a charter on 10 January

2008. 2008. HMRC will launch a consultation with interested parties and directly with members of the public on the development of a taxpayers’ charte

The Government will continue to seek ways of improving tax administration, including modernising powers and taxpayer safeguards. Budget 2008 announces future consultations in 2008 on:

• modernising and aligning penalties for late filing of tax returns and late payment of tax; and
• harmonising and simplifying the rules on interest on tax paid late and on repayments of tax overpaid.

Following consultation, the Government announces a streamlined and more consistent process across taxes for reviewing decisions and handling appeals before they come before a tribunal. This will complement wider tribunal reform.

Following announcements at the 2007 Pre- Budget Report and subsequent consultations, the Government will legislate in Finance Bill 2008 to improve the existing system of identifying users of disclosed tax avoidance schemes, and will legislate later in 2008 to extend the stamp duty land tax (SDLT) disclosure rules to residential property worth £1 million or above. A formal response to this aspect of the consultation will be published in due course, including the timetable for consulting on and introducing secondary legislation.

The Government is committed to modernising approaches to anti-avoidance where appropriate. The Government announces that it will:

• continue to consult on a principles-based approach to financial products avoidance, with the intention of legislating in Finance Bill 2009.

The Government firmly believes it is unfair that some individuals can arrange their affairs to gain a tax advantage by shifting part of their income to another person who is subject to a lower rate of tax. The Government considered the responses received to the recent consultation and believes that a further

period of consultation will ensure that the legislation in this area provides clarity and certainty for businesses and their advisers.

Chapter 5  Stronger Communities and effective public services

Housing Supply – Planning

Effective planning systems are essential to ensuring that development is delivered in a strategic and sustainable manner. As part of the implementation of the Review of subnational economic development and regeneration, the Government will shortly consult on bringing together the Regional Economic Strategy (RES) and Regional Spatial Strategy (RSS) into a single strategy setting out housing plans alongside wider economic, social and environmental objectives. The Housing Green Paper announced the Government’s intention to

conduct RSS mini-reviews to ensure each strategy sets ambitious plans consistent with the Government’s national targets.

The Government is introducing measures to reform the tax incentives for developing brownfield land to make them more environmentally sustainable. The landfill tax exemption for waste from contaminated land will be phased out by 1 April 2012. The Government will recycle the additional revenue to extend land remediation relief to expenditure on derelict land and to the removal of Japanese knotweed by treatment from 1 April 2009. The Government will consult on draft legislation in the summer.

CLG recently published an explanation of how it is envisaged  the Community Infrastructure Levy (CIL) will operate. Legislation is progressing through Parliament as part of the Planning Bill, and subject to Parliament’s decisions, CLG aims to formally consult on the draft Regulations in autumn 2008, with a view to finalising them in spring 2009.

The Government directly supports charities through a number of methods, one of which is the wide package of tax incentives worth over £3 billion to donors and charities each year. Gift Aid accounted for around £1 billion of this

package in 2006-07. However, the Government believes there is even greater scope for charities to claim additional funds through Gift Aid. Budget 2007 announced a consultation with the charitable sector on measures to increase take-up of the relief. Throughout the consultation charities were strongly supportive of the Gift Aid system, recognising the benefits of this successful tax relief.

As part of the Government’s objective to simplify the tax system, the Budget announces a number of measures that will further reduce the administrative burdens placed on charities, including consulting on legislation affecting substantial donors.

Chapter 6  An environmentally sustainable world

An ambition for all new non-domestic buildings to be zero carbon from 2019 with consultation on the timeline and its feasibility and new public sector buildings from 2018.

The European Commission has recently published its proposals including ambitious plans to develop Phase III of the EU Emissions Trading Scheme

(from 2012 to 2020). Defra will consult on the implications of the Commission’s Proposals.

The Government will take decisions on whether to align the tax/National Insurance Contribution treatment of AMAPs in light of the outcome of the HMRC consultation on collecting tax on benefits in kind and expense payments: Including benefits in kind and expense payments in the payroll – a fresh approach.

The Secretary of State for Transport will shortly publish a consultation document on the reform of bus subsidy, with proposals targeted at delivering carbon dioxide savings to support climate change goals and modernising bus services, through incentives for new technology.

Air Passenger Duty –  The Government began a consultation on the design of the new duty in January and welcomes responses by 24 April. In order to strengthen the environmental signal through taxation, this Budget announces that the Government will increase forecast tax revenues from the new per plane duty by 10 per cent in the second full year of operation

In the summer, the Government will launch a full consultation on what more the UK should do to increase renewable energy use and meet its share of the EU target. The Government will also consult on the most appropriate support mechanism for microgeneration at individual and community level, including the option of a feed-in tariff. The Government will also consider how to address barriers such as planning and grid access.

The Government will shortly be launching a consultation on carbon capture and storage (CCS) regulations as well as what it would mean for a new coal- fired power station to be ‘capture ready’, (i.e. to be in a position to retrofit CCS technology once it is proven at a commercial scale), and whether all new fossil fuel power stations should demonstrate that they are capture ready.

It is the Government’s ambition that all new non-domestic buildings be zero carbon from 2019. The Government will consult this year on the timeline for this ambition and its feasibility, and review progress in 2013. Achieving this goal will establish Britain amongst the world leaders in the field and make a significant contribution toward mitigating climate change by saving approximately 75 MtCO2 in the next thirty years.

 

In 2007, the Government announced that major retailers, with the support of manufacturers and energy companies, have agreed the ambition to phase out inefficient incandescent light bulbs by 2011, as well as looking at other possible voluntary agreements. The Government is consulting on standards and targets for other products.

For the longer-term, the Government has outlined its ambition that from 2016 all new homes would be zero carbon. To give the construction industry the certainty it requires to prepare for delivering the ambition, the Government will set out the definition for a zero-carbon home for the purposes of the 2016 ambition by the end of 2008, following a consultation in summer;

Single use carrier bags – The Government will consult in the on the operation of the charge and how to ensure that any money raised goes to environmental charities. The Government will ensure that donations made by retailers to charitable causes out of any money raised will attract tax relief in the normal way.

This is the 12^th Briefing Paper; a full list of subjects covered is available for Institute members and is a valuable resource covering so many aspects of consultation and engagement