Spring 2024 Budget: Views from practice: Tax

We asked leading tax practitioners for their views on the Spring 2024 Budget; here is what they said. Comments are listed A-Z by author.

It was always going to be hard to beat the big hits of 2023. Last year was marked not just by Barbenheimer, but also by the (slightly less explosive) full expensing, which became permanent in the Autumn Statement. However, the Chancellor still managed to bring his full, ahem, Jenergy to bear in this (decidedly pre-election) Budget, (at least, he did when you could hear him over the cheers and jeers).

With announcements ranging from continued freezes to most tax rates and thresholds (no surprise), National Insurance cuts (no surprise), the possible extension "once it is affordable" of full expensing to leased plant and machinery (a bit surprising), the abolition of SDLT multiple dwellings relief (a bit more surprising, but not completely unexpected) and some boosts to creative industries (enter stage left and take a bow), this Budget was all about the politics.

Aside from the most trailed measures, our contributors are particularly interested in the new reserved investor funds (RIF), which some feel may become the property investment vehicle of choice for private funds. Others focus on the proposed PISCES market which they hope will create liquidity for private investors.

For the main tax measures of interest to businesses, see our Spring 2024 Budget updates page. To filter updates by practice area (for example, Tax or Private Client), you can use the menu on the left of that page to add in your chosen filters and create a personalised, printable list of updates.

It was a quiet budget from a business tax perspective. With the chancellor focusing on reducing the tax burden, businesses might have hoped corporation tax would be addressed, especially since the yield from corporation tax has doubled from £0 million to £80 million over this government, even before the 6% increase in the rate from 19% to 25% in April 2023.

However, after the Autumn Statement focus on "110 measures for businesses" failed to move Conservative poll ratings, it may be that the Chancellor has his attentions elsewhere. Changes to corporate taxes take time to be felt by businesses, and even longer to be felt by voters.

There was big news for some key sectors though, including extending oil and gas windfall taxes, additional reliefs for the creative sectors, particularly film and theatres, and some big (but vague) changes for the NHS. Key local initiatives were also announced in various areas of the country.

Businesses might have hoped to hear for a delay on the new R&D regime (due to come in from next month) as suggested by the House of Lords economic affairs committee, or some additional information on the Pillar 2 Global Minimum Tax, but no mention was made of either. The only reference to capital allowances was a promise to extend full expensing to certain leased assets "when fiscal conditions allow".

With the turnover threshold for VAT registration frozen at £85,000 since 2017, the unexpected rise in the threshold to £90,000 seems like good news. However, this increase does nothing to address the "cliff edge" effect, where many small businesses are ensuring their growth is limited to just below the VAT threshold, and is still well below inflation.

Buried in the detail were some interesting nuggets, including a commitment to assess the cost of additional compliance arising from fiscal events, indicating the Treasury recognises the increasing compliance burden. A number of interesting consultations have also been launched, including on business rates and vaping. But for most businesses, the biggest impact this budget will have is the need to adjust their payroll - yet again - for the 2% national insurance rate cut.

I have talked a lot in recent years about Budget leaks, and it seems to be getting worse. Social media and mainstream press seemed to have all of the details provided in advance of the actual speech. Either that, or they are really good at guessing. In any case, this Budget had a pre-election feel to it, with tax cuts and a blatant attempt to steal thunder from previously announced Labour proposals.

The headline giveaway was the reduction in National Insurance, making it the third one since 2022. Raising VAT thresholds and changes to business rates have a housekeeping feel to them, rather than being seismic to the tax code. There was the usual raft of consultations being announced, from CRS to CARF. The Government also published its response to the consultation on the scope and design of a tax regime for Reserved Investor Funds. This is a long mooted investment fund for professional and institutional investors which takes the form of a contractual vehicle. It is expected to be introduced in the Spring Finance Bill 2024, with detailed rules and commencement dates being finalised in the future.

My personal view has always been that the current non-dom regime is a relic of the colonial era and has no place in a modern tax system. However, that is not to say that the UK should not try to encourage high net worth individuals to locate themselves and their businesses here, as the derivative benefits are considerable, and it all goes to what makes the UK as competitive as possible. The changes proposed to the non-dom regime are not particularly radical, and look at a four year window (but need to be balanced with the proposed changes to income tax, inheritance tax and the changes to CGT rates on property). I will observe with interest what happens with the detail of these changes, particularly given Labour’s interest in the topic and the election likely being prior to any proposals getting legislated. The obvious concern is that the package incentivises short term rather than long term relocation. But perhaps this is a pre-cursor to OECD changes that may come in the future for internationally mobile individuals.

Speaking of property, the abolition of SDLT Multiple Dwelling Relief seems to be causing some consternation, primarily for those who believe institutional investment is the solution to the housing crisis in the UK (as well as vital to certain sectors such as student housing). The extension of the Energy Profits Levy to 2029 was the other business measure which caught my eye, but not unexpected given that the oil & gas sector is an obvious HMRC target at the moment.

With the caveat that I have no political expertise whatsoever, I would be surprised if we are in for a Spring election, but that thought has more to do with current opinion polls rather than anything I gleaned from the Budget.

The big announcement for the real estate residential sector today was the proposal to abolish SDLT’s multiple dwellings relief (“MDR”). The government started consulting on reforming the relief to stop abuse back in 2021. Revoking the relief is a more drastic step.

We expect this measure may have the greatest impact on investors outside London or on forward fundings, where unit prices tend to be lower. It is perhaps surprising to see this change despite responses by a significant number of investors to the consultation suggesting that having MDR has had a positive impact on their decision to invest, and the size of their investment. Published policy costings show that the Treasury does expect a reasonable increase in revenue from this change, but whether that will come at the expense of the PRS/BTR sector remains to be seen.

The non-residential SDLT rates (of which the top rate is 5%) will continue to apply to purchases of 6 or more dwellings, but this could still be a significant increase on the possible 1% or 3% minimum SDLT rates which may have applied had MDR been available.

The change does not apply to contracts entered into on or before 6 March 2024, no matter when they complete, provided there is no variation of the contract after 6 March 2024. However, any contract entered into after 6 March 2024 can benefit from MDR only if it completes or it is substantially performed before 1 June 2024. Some buyers may have chosen to accelerate exchange of their deal to Budget day to secure the relief, where the completion date is on or after 1 June 2024.

The government also responded on the mixed-property consultation at the same time and has concluded, for now, that it will not take forward the reform to introduce apportionment of price between residential and commercial rates.

For those who want a greater supply of rental housing, Hunt will encourage landlords who had been renting out their properties as furnished holiday lets to make those same properties available for longer term residential tenancies. He will do this by withdrawing favourable tax breaks that apply to furnished holiday lets within the regime. It remains to be seen whether Hunt’s aim is achieved and whether a holiday let will be converted to the longer-term lettings market or the sales market. Supply is the real issue with UK holidaymakers and locals essentially competing over the same property. We expect an influx of UK holiday bookings!

In a positive move for the UK funds industry, it is good to see that the Chancellor has decided to give the green light for a new tax transparent unauthorised vehicle, the reserved investor fund. It is hoped the new fund will bring more holdings of UK real estate onshore and will provide an answer to investors who no longer want to use offshore equivalents in certain situations.

Save for the NICs changes, there was little in the Spring Budget for employee incentives practitioners - I suspect that the call for evidence on all-employee tax-advantaged plans and/or the consultation on employee ownership trusts and employee benefit trusts may pop up on the next Tax Administration and Maintenance Day, on 18 April 2024.

It will be interesting to see what developments flow from the government's consultation on the proposed Private Intermittent Securities and Capital Exchange System (PISCES) and whether the platform will ease some of the challenges for employees of private companies who are exercising options (particularly outside of an exit of the business). Billed as a new innovative market that will allow private companies to scale and grow, whilst it is hoped that it will provide a useful platform, as ever the devil will be in the detail.

It was a shame (for the Chancellor) that the best line of the day came from the Deputy Speaker - "could you please shout more quietly" captured the rather raucous atmosphere in the Commons, and may be coming to t-shirts near you soon. In contrast, "on track to be the next Silicon Valley" fell a bit flat and seems unlikely to do as well. The less said about the attempts at humour the better, as usual.

Away from the slogans and pre-electioneering, it mostly felt quite underwhelming from a technical point of view. The cat was well out of the bag on the NICs reduction and removal of the non-dom regime had been sufficiently trailed in advance – though there may be some interesting technical detail to get into there. The complete removal of MDR on English property transactions was more of a surprise, and may have caused shivers of alarm up the spines of those working on student accommodation transactions and the like. HMT think this could raise up to £385 million per year by 2029, which seems like a lot - the race will be on to complete before 1 June and avoid being part of that extra tax take. Almost as surprising was the decision not to take forward any rule changes on mixed-property acquisitions in England, which had looked more or less a done deal.

As always, reviewing the policy costing numbers in the Budget paper can be interesting. HMT predict that spending £140 million on HMRC debt management could yield over £1 billion of extra revenue. Perhaps some of the extra could be spent on occasionally answering the phones and helping taxpayers pay the right amount first time round? Also lurking in that paper and the OOTLAR was what looks like a statutory reversal of the decision in Fisher, though absolutely not badged as such. Never let it be said HMRC are sore losers.

Finally, I think there'll be some healthy scepticism that a new £5000 "UK ISA" allowance will be the shot in the arm that UK stock markets need.

Clearly, the headline proposal in the budget is the cut in employee National Insurance Contributions (NICs) by 2 percentage points, from 10% to 8% (and an equivalent cut for the self-employed) presented as a tax cut. However, existing personal allowances and rate thresholds have remained largely unchanged since 2021 for NICs and income tax rates. Even with inflation at 4% rather than 11%, this means that this move is far less generous than it would at first blush appear.

The full expensing for leased assets that was announced, to add to the full expensing for owned assets announced at the Autumn Statement, is likely to require a raft of anti-avoidance measures in order to ensure that it is not abused in practice. This, together with the caveat that it is only to be introduced 'once it is affordable', suggests that businesses wishing to benefit from it should not hold their breath.

The increase in the VAT registration threshold from £85,000 to £90,000, is perhaps not as significant a rise as some businesses would have wished for.

The introduction of excise duty on vaping products, to be matched with a corresponding one-off increase in tobacco duty, seems inevitable given the rise in the popularity of vaping amongst young people and public health concerns.

Several measures are addressed at property tax. The abolition of the furnished holiday lettings regime, the abolition of multiple dwellings relief from SDLT and the reduction of CGT on property from 28% to 24%, are all significant for those directly affected. However, the UK's property taxation regime – when we include council tax – remains dysfunctional and substantial structural reform is long overdue. Sadly, for tax system enthusiasts, this is unlikely to be a vote-winner.

The removal of the 'outdated' concept of domicile and the shift to a purely residence-based regime – aside from its obvious impact on the non-dom regime – may be as significant for those leaving the UK as arriving here, given its impact in relation to inheritance tax.

The maintenance of freezes on alcohol duty and duty on road fuel will, as always, be popular with consumers and the directly-affected trades, but it will also go down well with others, notably retailers, given the impact of road fuel duty on delivery costs.

A consultation on a change in the High Income Child Benefit Charge (with a view to its being assessed on a household basis) will entail a seismic shift in the basis of personal taxation that has prevailed since April 1990 when the independent taxation of married women was (finally) introduced. Care must be taken to mitigate the impact of this measure, designed to make the child benefit cap fairer, on those who may be subject to financial abuse.

There was welcome news on the introduction of the Reserved Investor Fund regime. The RIF is intended to enhance the UK’s existing funds regime by meeting industry demand for a UK-based unauthorised contractual scheme with lower costs and more flexibility than the existing authorised contractual scheme, open to professional and institutional investors. From an investor’s perspective, a RIF will be treated as opaque for capital gains purposes. The units in a RIF will be treated as an investor’s capital gains asset and any interest of the investor in the underlying property of the RIF will be disregarded for capital gains purposes. A RIF will be treated in the same way as a co-ownership authorised contractual scheme (CoACS) for the purposes of the regime for the taxation of disposals of UK real estate by non-residents. A RIF will therefore be able to make an exemption election for these purposes. In the long term, a RIF may become a more cost efficient holding vehicle for UK real estate than a Jersey property unit trust (JPUT).

There were no great surprises on the VAT front, though there were several noteworthy announcements. Firstly, the decision to raise the registration threshold to £90,000, after several years of it being frozen, perhaps signals an admission of defeat on the thorny issue of how to address the distortions created by the high registration threshold in the UK. Secondly, pressure clearly continues on the question whether the UK should re-introduce tax-free shopping. The Budget noted that the government will be looking at the issue again following the publication of more OBR findings on the fiscal consequences of its repeal. In the meantime, the government welcomes further representations on whether or not to re-introduce a VAT retail export scheme. Finally, the government confirmed it will update the underpinning legislation for the VAT Terminal Markets Order (TMO). This will allow for further reform, including bringing trades in carbon credits within the scope of the TMO in due course.

The Budget was relatively muted from a business tax perspective, with Jeremy Hunt preferring a “play-it-safe” strategy, adopting modest tax cuts and policies advocated by the Labour Party, rather than embarking on bolder policies which risked backfiring.

The launch of a British ISA (or “BrISA”) to reinvigorate investment in UK stocks is welcome in principle but, with a £5,000 allowance and the measure only at consultation stage, this is unlikely to move the dial.

The Chancellor had promised predictability to the oil and gas industry, reaffirming as recently as the Autumn Statement last year that the energy profits levy (“EPL”) would end by March 2028. However, he has now announced that the EPL will be extended by 12 months, thus ending in 2029. Industry have complained that this tinkering makes it impossible to plan and risks UK jobs. Jeremy Hunt will hope that they will forgive him, though, as Labour have advocated for a more radical reform of the tax through increasing the rate and removing incentives.

I must have sat through about 50 UK Budgets, Statements and other fiscal events by now and this one has perhaps the least to comment on of all. Chancellor Hunt put on a good performance and enjoyed teasing the opposition parties. We’ll see how many of his claims survive the fact checking. Madam Deputy Speaker enjoyed her spell in the limelight.

The common thread from my earliest Lawson budgets (as referenced today) has always been whether the tax regime for non-domiciled individuals would be ended. At last, after repeated complex reforms, its death has come. Not even a posse of whatever today replaces Greek shipowners will ward this off. Instead, new residents will receive a four year tax exemption on foreign income and gains. This is more in line with international regimes and will certainly be easier for all to administer. The reform is projected to raise about £3 billion each year: we will see! The transitional regime will permit currently resident non-domiciled individuals to remit accumulated foreign income and gains at a 12% tax rate. I think I know where that idea came from. The biggest impact will be on trust structures and the (due to be consulted upon) inheritance tax reforms, but private client tax advisers will not yet be thumbing through the announced HMRC guidance on deductibility of expenses of re-training.

On the financial services side, the consultation has opened for the tax regime for the new Reserved Investor Fund (Contractual Scheme). This fund type is a welcome addition to the UK fund products, but the grand vision of a suite of UK professional investor funds to rival those in other jurisdictions is no more. There are various pension fund reforms which have been long canvased, and a UK ISA which may be little more than a convoluted £5,000 extension of the annual investment limit.

Full expensing for leasing companies – update

The Government has announced that it will publish draft legislation in the next few weeks extending full expensing to leasing companies. However, the timing of this new measure is still uncertain.

Since 2021, the Government has sought to increase capital investment in UK plant and machinery through generous capital allowances (the super-deduction, followed by full expensing). These reliefs have not generated the anticipated benefit to the UK economy. One reason for this is that in order to fully benefit from these reliefs, businesses had to be confident they would have sufficient UK profits in the year in which they incurred the expenditure. Where very large capital investment is made, this might not be the case.

In order to deal with this concern, the Government has set up a working group to consider extending full expensing to leasing companies. The intention is that the lessor will buy the asset to be financed, lease it to the lessee for say 7 years and obtain the value of the full expensing tax relief. As result the lessee will be able to obtain cheaper finance and borrow at a higher loan to value. Given current rates of interest and inflation, such lease finance is expected to be attractive to businesses looking to invest in UK plant and machinery. It is also expected to be a factor which will influence a business deciding whether to invest in expanding its operations in the UK or overseas.

We expect this change to apply to expenditure incurred on or after the date the rule is introduced. Given the construction time for many items of plant and machinery that could benefit from this change, it is hoped that an announcement to introduce this change in a set timeframe is made soon. This will give certainty to those businesses deciding whether to invest in UK plant and machinery, and inevitably (as the new investments are built and start generating UK profits) boost the UK economy.

The changes to the Transfer of Assets Abroad (ToAA) rules will make an already complex set of rules more difficult. Participators in close companies may have little or no control over what a close company does. And the “power to enjoy” provisions are subjective and often cannot be relied upon to take a transfer outside of the charge. So much will come down to how “qualifying interest” will be defined. Will it be 10%, 25%, or 51%? Let's hope that it is the latter, so that the revised ToAA rules catch only those that can genuinely direct what the close company does.

The clampdown on tax evasion and all forms of tax non-compliance continues:

Appealing to the court of public opinion that everyone should pay their fair share of tax, the Chancellor has confirmed that he will make available additional investment in HMRC to investigate and tackle all forms of tax non-compliance. Increased funding for HMRC will be vital to accelerate its investigation work, which all too often has been delayed or hampered by a lack of resource impacting on its ability to use its powers to the full extent. This investment must be used wisely by HMRC and additional and well-trained personnel hired to support its compliance work. Certainty for taxpayers, who have been subject to disproportionately prolonged enquiries from HMRC, is paramount. It will also be important that HMRC does not use any such investment inappropriately to target large businesses and other taxpayers which, although their tax affairs may be very complex, have not done anything wrong.

The government’s attention has also turned again to tax advisers, as it opens a consultation into introducing further regulation of tax advisers. We welcome the intent to clamp down on unregulated advisers who, at best, may give negligent advice and, at worst, may be dishonest. This can cause huge damage to taxpayers’ business and undermines the integrity of the tax system. We are pleased that the government is consulting on a range of approaches to regulate the market but the devil will be in the detail. We agree that membership of a professional regulated body for tax practitioners is critical. Most tax agents are already regulated in this way. However, one of the proposals under consideration, to establish a new external independent regulator is likely to involve uncertainty, risk, considerable expense and it is not yet clear to what purpose?

The Chancellor, in what is (possibly) his last fiscal event prior to the election, has delivered a "Budget for Workers" (and possibly second owners) rather than a "Budget for Business". There are very few beneficial changes to business taxation which have an immediate effect. The timescales for many positive changes, e.g. full expensing for leased assets and additional tax relief for the visual effects industry, have been pushed out to allow for consultation, and the time period for tax raising measures such as the Energy Profits Levy have been extended. The announcement of a 2p cut in the national insurance rate and the abolition of the non-dom regime has surely fired the starting gun for the next election. Whilst Labour cannot claim that the Tories have "stolen their clothes" by abolishing the remittance regime for non-doms, they could certainly argue that they have borrowed their coat without asking!

A rather curious Budget, with the headlines on tax largely made up of tribute acts.

There was a nod to the flagship measure from the last episode in the autumn, doubling down with further cuts to national insurance rates. While at the same time appropriating some of the other side's flagship tax policies, so as to engineer enough notional headroom in the forecast charts to justify going back to the well on NICs. In particular, abolition of the remittance basis for non-doms had been widely anticipated in the short-to-medium term. Just not by this party, on this side of the general election.

Another point of interest is the continuing journey of the full expensing 100% capital allowances regime. Only a few months ago full expensing was upgraded from a temporary to a permanent measure, with careful consideration to be given to the exclusion of the asset leasing industry from the regime as initially crafted. The message now is that we will shortly have draft legislation to reverse this and apply full expensing to leased assets, but that it will only be brought in "as soon as it is affordable". It's tempting to wonder whether journey's end will be reached, before or after fulfilment of the stated long term ambition to cut NICs all the way down to zero.

The 2024 Spring Budget includes very few changes worth mentioning for corporation tax payers, apart from some small incentives for certain creative industries, and the prospect of “full expensing” being extended to leased assets.

The well-trailed headline tax cut was a further 2 pence in the pound reduction in the main rates of national insurance contributions (but not the employer rate). Another £10 billion in annual tax cuts for employees and the self-employed, to add to the £9 billion cuts in the 2023 Autumn Statement. Even after these changes, NICs raises around £150 billion – around 15% of the total tax revenues, similar to VAT – so abolition sounds like a pipe dream.

Another small tax cut was new slightly lower 24% higher rate for capital gains on residential property takes its place alongside the 10%, 18%, 20% and 28% CGT rates. Perhaps I am alone in thinking that applying five rates to various categories of gains may be four too many? Once upon a time – until 1988 – CGT was fixed at 30%. As recently as 2010 there was a single fixed rate of 18%. Please, can we have some simplicity back.

There will be a sea change for those advising overseas persons moving to and living in the UK, with the proposed abolition of the remittance basis of taxation on foreign income and gains (FIG) from April 2025 in favour of a four-year exemption, after which everyone will pay at UK rates on worldwide income and gains. There is a short technical note, short on technical details, but no draft legislation yet, so it remains difficult to advise clients what to do, particularly with a general election likely to intervene.

We also face the prospect of inheritance tax being based on long-term residence after 10 years and not actual domicile (or deemed domicile after 15 years), with a long tail of 10 years of liability after leaving the UK (rather than 3 years under the current deemed domicile rules).

We await full details of the proposed changes to inheritance tax, but the Treasury forecasts that the change to the remittance basis will bring in approaching £3 billion a year, similar to the (heavily criticised) estimates that academics from the Warwick and the LSE published last year. And what behavioural changes might there be? The initial exemption for four years looks attractive, but will mobile people then go away and take their FIGs with them? I understand that Italy is an increasingly attractive destination at the moment…

As expected in an election year, this was a budget for people (in particular workers). However, with reports that NICs is not well understood by the public and the fact that the cut to NICs announced in the Autumn Statement did not have a significant impact on the Conservative Party's rating in the polls - it is questionable whether the chancellor has done enough in this budget to find favour with the voting public. A cut to income tax - which could still be possible in an Autumn Statement (should the general election not be called by then) or in the Conservative manifesto - would be of broader appeal, benefitting not just workers and the self-employed.

No announcements were made with regard to unfreezing the income tax personal allowance or any change to income tax thresholds, either of which would help ease the impact of fiscal drag. No announcements were made either in regard to IHT – potential rumours had included an increase in the nil rate band (of £325,000) which has been frozen since April 2009 or a complete abolition of the tax. As IHT however only affects around 4% of estates this measure was unlikely to be of broad electoral appeal and so is not conspicuous by its absence.

It was encouraging to see an increase in the VAT threshold which has remained unchanged since 2017. The announcement aligns with the government's focus on economic growth - as raising the VAT threshold has the potential to stimulate economic growth by removing a hindrance for businesses as they approach it. However, the increase of £5,000 (to £90,000) seems small and is unlikely to make much difference in practice.

It was interesting to read in the consultation on Raising standards in the tax advice market: strengthening the regulatory framework and improving registration that the government intends to mandate registration for all tax practitioners operating in a professional capacity who wish to interact with HMRC and that it plans to introduce a single agent registration service that will allow a tax practitioner to register for all relevant services. Given our experience - which has at times led us to pull out our hair dealing with different taxes on different HMRC portals (such as the Online Agent Authorisation and Agent Services Account) - the move to a single agent registration would be welcome although we suspect not straightforward.

Jeremy Hunt cuts a cautious and moderate figure that nobody would take for a gambler – but with the electoral odds stacked firmly against his party, it is hardly surprising that he rolled the dice in his second full Budget as Chancellor. For starters, the 2% cut in employees’ national insurance, taken with the earlier 2% reduction following the previous Autumn Statement, means that for employment income taxed at the basic rate the effective tax rate has been reduced under his tenure from 32% to 28% - a move made all the more remarkable by the fact that not two years have passed since his predecessor had increased that effective rate to 33.25% ahead of introducing the abortive Health and Social Care Levy. The replacement of the remittance regime for non-domiciliaries from next April is the other big move, of course. The grandfathering provisions are relatively limited, there being only a first-year 50% reduction in foreign income (but not gains) subject to tax for those losing the remittance basis, and with pre-April 2025 income and gains not escaping the net. The latter blow is softened a little with a reduced 12% rate for remittances of such income and gains within the first or second years of the new regime, and CGT rebasing to April 2019 (presumably to align with the rollout of the broad form non-resident CGT regime) is available. However, similar reforms of the inheritance tax rules have been kicked into the long grass of a future consultation. The theft of Labour’s thunder was rounded off with the extension of the Energy Profits Levy by one year to March 2029, with the Exchequer impact forecast for the Energy Security Investment Mechanism effectively confirming that the Levy will not be withdrawn early. Finally, a mixed bag on the residential property front: those with a second home and looking to sell it will benefit from a reduction in the higher CGT rate from 28% to 24%, whilst those looking to rent it out will no longer be able to benefit from the Furnished Holiday Lettings regime. For those looking to acquire two (or more) homes, the abolition of Multiple Dwellings Relief will come as an unwelcome surprise – the oddity being of course that bigger players will continue to benefit from the application of non-residential SDLT rates to acquisitions of six or more dwelling in a single transaction.

As usual, much of the bits of most interest to practitioners are not in the Chancellor’s speech but buried in HM Treasury’s “Spring Budget 2024” report (of 94 pages!).

Page 73 says that “The government is publishing a consultation both on options to strengthen the regulatory framework in the tax advice market, and on requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf “. Watch that space !

The following paragraph on page 73 announces that, from 1st April, the rate of Economic Crime Levy (anti-money laundering, for regulated entities with UK annual revenue greater than £1 billion) will increase from £250,000 to £500,000 per annum.

As expected with a Budget close to an election, the emphasis is on reductions in taxation—a Table on pages 75 to 78 suggests that the Government is giving away nearly £14 billion in net tax cuts, with the only substantial tax increase being the much-forecast abolition of the non-dom tax regime, hoped to bring in about £3 billion in 2026/27. This is largely to be funded by a hoped-for increase in productivity and a 5% improvement in the efficiency of administration across Whitehall (strongly reminiscent of an episode of Yes Minister 40 years ago, when Jim Hacker was Minister for Administrative Affairs!).

There’s also (page 75) considerable assistance for medical research in Cambridge, presumably in an attempt to bring it up to the standard of Oxford!

Transfers of Assets Abroad: It is announced (on page 72) that measures will be introduced in the forthcoming Finance Bill individuals cannot use a company to bypass the Transfers of Assets Abroad legislation. Presumably to clarify the analysis of the Court of Appeal in Fisher [2021] STC 2072.

There’s considerable help (pages 80,81) for the creative industries (especially film studios, theatres and orchestras)—again evoking Yes Prime Minister 40 years ago, in which Sir Humphrey advocated funds for the Royal Opera House at the expense of Jim Hacker’s soccer club!

Finally, it is the universal mantra that the UK is being taxed at the highest overall rate since the early 1950s—but the spread is very different. Then, and indeed until the late seventies, we had a top income tax rate of 98% and short-term capital gains (profits on assets bought and sold within a year) were taxed as income; plus we had excess profits tax to pay down the war debt, and, later, development gains tax to tax development gains at income tax rates (substituted in 1976 by development land tax at initially 80%, later 60%). Something the next Government might ponder!

For many corporates, the Spring Budget looks distinctly boring.

The main rate of corporation tax will (no surprise) remain at 25%. Certain key measures are either already in place (such as full expensing having been made permanent) or remain subject to further consultation. “New” developments in this Budget tend to focus on specific industries, niche issues, were broadly anticipated, will be fleshed out properly later, and/or can be described as “tinkering” rather than involving wholesale change.

To give more of a flavour, we see that energy companies may be disappointed by the extension of the Energy Profits Levy to 31 March 2029, albeit subject to the possibility of early termination through the Energy Security Investment Mechanism (as previously announced). Owners of close companies may be interested in the tweaks to the Transfer of Assets Abroad Rules (which seemingly unwind the Supreme Court’s decision against HMRC in Fisher). For players in the film industry, the government has announced additional tax relief for visual effects costs. R&D intensive businesses won’t see any further changes in terms of how R&D tax relief will work (this was dealt with at the Autumn Statement 2023), although HMRC will establish an expert advisory panel to support the administration of those reliefs. And in the funds space, we are told that the Spring Finance Bill 2024 should include legislation in respect of Reserved Investor Funds (a new type of unauthorised contractual scheme) – but the detailed tax regime for it will come later in the form of secondary legislation.

With that, we are left wondering whether paragraph 5.51 of the Red Book (“The government will bring forward a further set of tax administration and maintenance announcements on 18 April 2024”) is in fact doing quite a lot of work.

The Spring Budget has unashamedly focussed on personal tax measures – perhaps inevitably so, given that we’re in the run up to a general election where the voters are actual human beings (not mere bodies corporate). As employers of such actual human beings, some of the flagship personal tax measures will be of interest to corporates too. Whilst the cut in national insurance may fall on the easier side of the fence, the proposed removal of the non-dom regime and its replacement with a new residence-based regime may necessitate careful thinking regarding the management of an internationally mobile workforce. And UK corporates – perhaps especially those operating share option plans – will want to eye up the potential positive implications of the proposed new UK ISA.

So all in all, there is not nothing in this Budget for corporates – although there certainly is less than we’ve seen in previous months and years. But a quiet Budget is not necessarily a bad thing for corporates, who already have plenty on their plate to be thinking about!

One of the only exciting things to come out of Budget 2024 was a consultation (which, like most of the other headline measures, had been trailed widely) on a new crossover market, to sit between public and private markets, to create further liquidity in the shares of private companies without the burden of a public listing. This is to be called the Private Intermittent Securities and Capital Exchange System or, more snappily, PISCES. The market, which forms part of the Government’s December 2022 Edinburgh reform package to make the City more attractive to investors, is aimed at institutional and professional investors, such as pension and private equity funds, rather than retail investors (though the class of persons who may be able to buy shares through PISCES is itself the subject of the consultation). Subject to approval by the Financial Conduct Authority, PISCES is expected to launch by the end of 2024. PISCES will operate as a secondary market, facilitating the trading of existing shares; it is not expected to facilitate capital raising through the issuance of new shares. PISCES would accommodate ‘trading windows’ at defined intervals (e.g. monthly or quarterly) allowing eligible investors and, if a company agrees, its employees, to trade their shares. Companies would be required to disclose certain information to “white list” investors, reflecting the fact that shares would be traded only on certain days, but would not need to publish the information more widely. On the face of it, this is good news for private company shares schemes. Careful consideration will need to be given to the mechanics of how this will work, how the opportunity to sell on any trading windows would interact with existing share scheme rules and any tax and payroll considerations. Responses to the consultation should be submitted by 17 April 2024.

Otherwise, the SAYE and SIP call for evidence and the Employee Ownership Trusts (EOT) and Employee Benefit Trust (EBT) consultation went unmentioned, which is unfortunate given the amount of work contributors and other stakeholders put into these. In view of an expected general election later this year, let’s hope they don’t disappear from the agenda altogether…

So the end is finally nigh for the remittance basis. Many will argue that this will hurt the UK's competitiveness and make it less attractive to the internationally mobile. There's legitimate scope to disagree on this – but what surely matters more to the UK's competitiveness is having a stable and predictable tax system. Perhaps the remittance basis needed to go, but it would be better if this involved a proper consultation of the pros and cons and a clear statement as to what the Government is trying to achieve. Suddenly moving the goalposts in this rather nakedly political manner hardly inspires confidence in the attractiveness of the UK as an investment destination.

Still, at least there was not much to report on the corporate tax side, so that did remain stable!

The Budget item of interest to me is the promise of draft legislation and technical consultation on the possible extension of full expensing to qualifying expenditure on leased assets. HMRC has a long-held mistrust of finance leasing of plant and machinery, and the once booming industry has been effectively shut down from the Noughties onwards by a succession of legislative changes coupled with low interest rates and corporation tax rates. It will be interesting to see whether finance leasing, as opposed to just operating leasing, will be included in the proposals. But the prospect of first year allowances with the current high interest rates and a corporation tax rate of 25% could reinvigorate finance leasing as a viable alternative to straight debt finance for businesses. However I suspect that this might be a step too far for HMRC.

In one of the rowdiest fiscal events in recent years, business tax announcements were pretty thin on the ground, with reform of the non-dom regime and NIC cuts instead taking centre stage. Even a good rummage through the OOTLAR and Red Book failed to elicit anything of great interest. Several pages were taken up with introducing/abolishing/generally tinkering with various tax reliefs. SDLT Multiple Dwellings Relief is going (much to Angela Rayner's chagrin, if the Chancellor is to be believed!) but reliefs for the creative industry are being enhanced, including a new UK Independent Film Tax Credit. Thankfully, though, there seem to be no further changes to R&D tax relief (a relief in itself!).

Another potential relief (of sorts) is the possible extension of full expensing to assets for leasing. Again adopting the 'draft first, decide later' approach employed with the merged R&D scheme last year, draft legislation will shortly be published for technical consultation, with a decision to proceed only being taken 'when fiscal conditions allow'.

We've been promised further tax and maintenance announcements on 18 April 2024, so there may be something of interest then (but don't hold your breath…).

I am old enough to remember a time when the contents of a Budget remained secret until the Chancellor made his speech in the House of Commons. Indeed, well before my time, Hugh Dalton resigned as Chancellor for letting slip some of the Budget announcements to a journalist shortly before giving his speech. Now we knew most of the content of Jeremy Hunt’s Budget well before he stood up, although (no great surprise) he kept a few "rabbits" in his back pocket. The element of surprise has (largely) gone, and it seems that Budgets are no longer the principal fiscal event of the year, just one of several. It was only a few months ago that we had the Autumn Statement that generated a Finance Act that has only just had Royal Assent. Now we start the legislative cycle again.

When I was a junior tax lawyer, you could listen to the Budget speech live on the radio or you could wait to read it in the newspapers the following day. Press releases were collected in person from the Inland Revenue, Customs & Excise and the Treasury. Now, if the internet can take the strain, we watch the Chancellor online and download the Budget bumf almost immediately from the comfort of our desk. Mind you, some things haven’t changed: the OOTLAR may contain more of the detail that is relevant to tax practitioners than you heard from the Chancellor but still not enough to make sense of the full impact of the announcements. We'll have to wait for the Finance Bill and plough through the consultations that have been announced.

Turning to the content of the Budget, you might suspect that there's an election in the offing. There were some well-trailed tax cuts or freezes to appeal to voters (unwise or not bold enough, depending on your views), together with potential future reforms (full expensing for leased assets was unexpected) that depend on the outcome of that election. As usual, we were told the cuts will be paid for by a mix of tax avoidance measures, some relatively stealthy tax rises (furnished holiday lets were already in the firing line with council tax and planning reforms but the abolition of SDLT multiple dwellings relief was a surprise) and poking a stick at Labour’s tax plans (non-doms) plus public sector "productivity plans" and forecasts of future economic activity (which will inevitably have changed by the time of the next fiscal event). As ever, the numbers bandied about (£2 billion here, £5 billion there) sound large (and, of course, they are) but as part of a £1 trillion government budget, they can feel like rounding adjustments when you step back from the noise generated on the day.

Overall, then, it was a Budget that was relatively light on content – the decks were being cleared and the guns lined up for the general election.

Perhaps the Tories remain scarred by (and scared of) the consequences of the "Kamikwasi" budget, but as was the case last Autumn the likely measures came as limited surprises, with the fuel duty and 2% NICs cuts widely trailed for a while, and even the possibility of changes to the Non-Dom rules leaked last week.

It was difficult not to feel that the Chancellor had dug deep into his (or, indeed, the Opposition’s, in the case of the Non-Dom changes and energy windfall tax) bag of tricks, found a few options that appealed to him, only to find that he couldn’t afford all of them. So, full expensing for leasing and abolishing employee NICs (although this must surely be a pipe dream unless a future Chancellor finds 10s of £billions under a rug) are all proposed but only if/when affordable. Or were these just poison pills in case the Tories lose the election, alongside the real terms cuts in non-protected public services post-election?

Generally, though, not much of note for business taxation – this was a Budget aimed squarely at individuals (i.e. voters) and not businesses.

The Non-Dom reforms are arguably the most surprising move, at least when considering that this did not seem to be on the Tories’ radar even in the middle of last week. The headline similarities with the rumoured Labour measures are striking – adopting the rumoured four year carve out for short term residents favoured by Labour and doing away entirely with the (now-anachronistic?) remittance basis; and the move may be politically astute in an election year, undermining one of the Labour Party's cornerstone tax promises and diffusing the debate over the PM's wife's tax position (together with the potential in the short term to accelerate some revenues by the lower rate for remittances in the first couple of years). The longer-term wisdom of the move (raising roughly the same amount as fuel duty will cost in the next tax year) may depend on whether you believe the more negative views on how more mobile and internationally-minded Non-Doms might react, for example in the asset management industry. And will the Labour Party accept the approach proposed by the Government or replace these changes with their own flavour of reform? To be confirmed, both as regards the changes to the (newly-titled) “foreign income and gains” but also on the (to be consulted on) residence-based Inheritance Tax changes.

As this was one of the most rowdy Budget speeches in years, it was obvious an election is just around the corner… so was the Chancellor’s announcement to extend the freeze on the cost of a pint (alcohol duty) until 1 February 2025, a cunning ploy to leave the opposition wondering whether the election will now be held on 28 January 2025 ?!!

The Chancellor constantly repeated “this government cuts taxes” and explained how the 2% cut in NICs, “together with cuts announced at Autumn Statement 2023 will provide an overall 4p tax cut for 27 million working people.” The only real “drag” for the Chancellor was the “fiscal drag”, as the BBC immediately informed us “New official forecasts say the government will collect… in 2028/29 - the highest level [of taxes] in nearly 80 years !” But like the much leaked 2% NICs cut and the scrapping of the furnished holiday lettings regime, this was “old news”.

The Budget did include some genuine interesting developments, particularly concerning full expensing, property taxes, and non-doms. Last year I noted that although full expensing is a generous relief, struggling corporates with losses/low profits, would not be able to utilise such relief and how when struggling companies faced similar issues in the 1980s the finance leasing industry developed to allow companies to enjoy some of the benefits of enhanced capital allowances through reduced lease rentals. It is therefore encouraging to see the government is now considering extending full expensing to leased assets. On property taxes, we finally got the government response to the Consultation on SDLT MDR and mixed-use property. It was no surprise that MDR was scrapped, but the decision to leave intact the mixed-use property rules, and the reasons for doing so (avoiding making the SDLT rules even more complex) were surprising and curious. Equally unexpected was the cut in CGT on residential properties sales from 28% down to 24%, made on the basis it would raise revenue and boost the availability of housing by encouraging residential disposals.

On non-doms, the real interesting part is not that the regime was scrapped, but that it will be replaced by a residency based regime which means those who come to the UK will have four years before being taxed on their foreign income like everybody else. The transitional rules (allowing for rebasing of capital assets to 2019 values, and a 50% reduction in the foreign income subject to tax for the first year) look fair and sensible. A striking proposal is the Temporary Repatriation Facility, which will allow existing non-doms to enjoy a reduced 12% rate of tax if they remit previously accrued FIG within two years. This is reminiscent of Donald Trump's 2017 tax reforms offering sharply reduced tax rates to US companies that repatriated overseas cash, which was reported to have resulted in more than $650m being repatriated to the US in 2018.

In what might be his last budget, the Chancellor Jeremy Hunt has had his hands tightly bound by an economy in recession. As swan songs go, it may not prove to be the most memorable but, as Truss could testify, that’s not always a bad thing.

Against the backdrop of the new audio-visual expenditure credit for film, TV and video games productions, available from 1 January 2024, the Chancellor has introduced a trio of new measures to continue the success story of the UK’s creative industries by providing the support required for future growth.

First, the new Independent Film Tax Credit, an above the line credit available for films that have total core expenditure of up to £15 million and that receive a new accreditation from the British Film Institute. The credit rate will be 53% of qualifying expenditure, which equates to an effective rate of 39.75%. As with other creative reliefs, qualifying expenditure is capped at a maximum of 80% of a film’s total core expenditure. This is a significant increase on the net credit the same film could have otherwise claimed under AVEC and should therefore be welcome news to those who are able to qualify. In terms of timing, the relief is being introduced for films that commence principal photography on or after 1 April 2024. Claims can be made from 1 April 2025.

Second, as trailblazed in the Autumn Statement, the government has announced enhanced tax relief for visual effects costs in films and high-end TV. Subject to certain conditions, visual effects expenditure by those productions in the UK will receive an enhanced tax credit rate of 39% (as opposed to 34%) and the 80% cap on qualifying expenditure will also be removed for these costs. The changes will come into effect from 1 April 2025. It is anticipated that a consultation will be published in due course on the types of expenditure which will be within scope. This targeted support should provide a welcome boost to the UK’s VFX industry.

Finally, in order to promote and maintain investment in new studio space, the Chancellor announced a 40% relief on business rates for eligible film studios in England for the next 10 years. Whilst the details are still to be announced, it is hoped that this relief will help to continue to make the UK an attractive and competitive jurisdiction for the creative industries.

When choices are limited, it’s even more important to choose wisely. It is therefore rather odd that the Chancellor has ignored the weak applause that met his last round of NICs reforms in the Autumn Statement (namely, the abolition of Class 2 NICs for the self-employed, a reduction in Class 4 self-employed NICs from 9% to 8%, and a reduction in Class 1 employee NICs from 12% to 10%) and has introduced more NICs cuts in the Spring Budget, namely a further reduction in Class 4 self-employed NICs from 8% to 6% and in Class 1 employee NICs from 10% to 8%. Hardly blue sky thinking and coupled with the effect of freezing allowances and income tax thresholds few voters will feel better off as a result.

One of the most pored over announcements will surely be the abolition of the remittance basis of taxation for non-doms and in particular the rules that will fill its place. The abolition of the current regime is the easy bit, the details and nuances will lie in the new one and the transition to get to it. Putting the details to one side, it was interesting to see that the additional revenue from the reform is forecasted to be only £2.7 billion, per year, by 2028-2029 (dropping from £3.7 billion in 2027-2028 – presumably as the bump from the temporary repatriation facility falls away). One cost of the new regime that will limit the net revenue raise will be the loss of income from non-doms paying the remittance basis charge. That loss ought to be straightforward enough to compute, but the big unknown is what impact there will be from mobile non-doms leaving the country. The statement in HM Treasury’s policy summary that the UK will “remain internationally competitive and attract the best international talent” is on the optimistic side, especially in light of competing regimes such as the one in Italy. Let’s also not forget the importance to non-doms of IHT, and that a lot of work will need to go into the less formulated residence-based regime for that tax too.

One notable absence from the Budget announcements is an update on the stamp taxes on shares modernisation programme. The improvements contemplated in the consultation on that, if they go ahead, will bring an extremely welcome series of simplifications to an outdated regime, and are long overdue. It would have been great to have seen a commitment to implementing some or all of those proposals, or even a timeline for next steps. The silence is tempered somewhat by news in the background that HMRC is conducting research over the next few months with stamp tax practitioners, in order to make sure HMRC understands stamp taxes on shares better. A more public statement of intent could have accompanied that.

One non-tax development that tax practitioners will need to keep up to speed on is the consultation on the new PISCES hybrid market platform, due to be launched by the end of 2024. It’s unclear how workable or attractive the new platform will be, but it has potential to disrupt the market in private company shares, creating new liquidity opportunities. Tax advisors will need to understand how trades are going to be implemented on the new market and consider questions such whether shares admitted to trading on the market would be “readily convertible” for the purposes of rules on the taxation of employment-related securities. Other open questions will include whether PISCES will be treated as a “recognised growth market” for stamp duty purposes – and if it isn’t, how stamp taxes would be imposed and collected. Tax is not addressed at all in the consultation document.

Overall, this is an interesting budget, especially on the private client side and for indirect taxes.

For SDLT, multiple dwellings relief is abolished. This leaves, for now at least, a contrast with Scottish LBTT and Welsh LTT, so it will be interesting to see what happens there. Given the amount of litigation which MDR has produced, and HMRC has won, it is unsurprising to see it go. The original policy of facilitating off-plan purchases has been drowned out by perceived abuse. It is noteworthy that the nonsensical rule for mixed-use purchases, which has also been much litigated with HMRC again succeeding against some aggressive taxpayer claims, remains.

Reports following the budget say the Chancellor was constrained on raising the VAT threshold by the arrangements for Northern Ireland. It is perhaps worth reflecting on whether worthwhile substantive VAT changes are not happening for this reason. In a cost of living and environmental crisis then zero-rating essential and worthy items is surely what should be happening?

For private clients, the abolition and partial replacement of the non-domicile regime will grab the headlines. The changes to the transfer of assets abroad regime to reverse the effect of Fisher should also be noted. The extension of agricultural property relief for inheritance tax for land managed under environment agreements is noteworthy for rural businesses – although there remains much uncertainty around the tax treatment of “natural capital” and “environmental credits” projects.

If I had to choose “what three words” to describe Budget 2024 they would be “thin political niche”.

The political aspects will be pretty obvious, and not just in freezing alcohol duties and maintaining the cut in the rates of fuel duty – want the Government to tackle the non-dom regime? Vote Conservative. Want a UK ISA to encourage retail investment in British business? Vote Conservative. Want to see that NICs reduction come into force and actually stay in play? Vote Conservative. The Chancellor didn’t quite say that in his speech, but he might as well have.

The “thin” aspect speaks for itself as well. I haven’t cross-checked the last 25 years, but from memory I’ve never seen such a short OOTLAR. There is almost nothing to talk about outside niche areas. Big payers under the Economic Crime Levy will want to know that their contributions are going up. Those involved in the British independent film industry will want to look at expanded tax relief for their productions. Those involved in leasing may hold out some hope of full expensing for leased assets (don’t hold your breath though – that’s “subject to future decision” aka if you want it, vote Conservative).

The only really general measures of significance are all real estate sector focused – dropping the rate of Capital Gains Tax rate on UK residential property disposals from April 2024 will be the crowd-pleaser for higher income voters; abolition of furnished holiday letting somewhat less so (but that’s only a maybe – it’s not in Finance Bill 2024). Abolition of Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax from June this year is the big one that will hit housing funds and cause a stir in the commercial market, and there may well be a mad rush ongoing on Budget Day to hit that midnight deadline to exchange contracts (a mad rush last seen in 2003 when SDLT came in). Otherwise one can only wish them all good luck completing before 1 June.

I am long enough in the tax tooth to recall the days when national insurance contributions were increased (in 2002 as well as 2022), when the rate of corporation tax was reduced, when capital allowances became less generous, when the capital gains tax rate on residential property was increased and when the non-dom regime has been materially amended.

We have become accustomed to fiscal events heralding a deluge of minor tweaks to the UK’s tax system in the face of desperate pleas from UK business for stability and certainty. What of Jeremy Hunt’s 2024 Spring Budget which, with a general election looming, was always going to tread a fine line between fiscally constrained circumstances and pre-election give aways? Among the pre-announced reduction in employee national insurance contributions and the abolition of the non-dom regime, and the inevitable tightening of perceived abuse, there were indeed some surprises such as reducing the higher rate of CGT on disposals of residential property and a consultation on extending full expensing to leased assets.

In an election year the personal tax changes were perhaps inevitably more prominent than those impacting business. The flagship abolition of the non-dom regime, possibly borrowing from another party’s proposals, replaced by a residence based test applying equally to UK and non-UK citizens may well be a welcome simplification.

From a corporate tax perspective, windfall taxes continue to come (and perhaps go). We welcome the fact that HMRC will establish an expert advisory panel in respect of administering R&D reliefs, but it would perhaps be more helpful for HMRC and policymakers to heed the representations which have been made that the current drafting merely enables US and potentially other parent company or head office taxing authorities to impose tax on the credit granted by the UK.

Overall, many of these changes remind me of a yoyo going up and down – increase the rate, no decrease the rate, introduce it, no abolish it, and repeat! Further, it is not entirely clear which of these changes will remain in place in the event of a new government. Amongst suggestions of appropriating ideas from other political parties, it is enough to make me wonder: are there are any new ideas in tax, at least in terms of domestic policy? Perhaps if one watches long enough the yoyo simply goes down and then up and so on.

After a wait of two years, HMRC finally published its summary of responses to the consultation which closed in February 2022 on potential reform of the SDLT rules for mixed residential/non-residential property transactions and the SDLT relief for purchases of two or more dwellings known as multiple dwellings relief or “MDR”. The outcome of the consultation for reform of these two areas could not be more different.

Whilst the government confirmed that it will not be making any changes to the SDLT rules for mixed property purchases, somewhat surprisingly, the government announced that, rather than taking forward any of the potential options for reform of MDR, MDR is to be abolished. The government’s interpretation of an external evaluation is that it indicates that removing MDR from business purchasers would be unlikely to have any substantial effect on investment in residential property. Ultimately, for business purchasers, whether abolition of MDR could materially increase SDLT liabilities will depend on their specific circumstances.

In an important change to the landscape of real estate funds, we will finally get to see the birth of the Reserved Investor Fund (RIF) in the Finance Bill 2024. The RIF is likely to become the vehicle of choice for private funds investing in UK real estate as it can be marketed to a wide range of sophisticated investors (as an alternative to the private REIT, which must be at least 70% owned by qualifying institutional investors).

The RIF can be used where at least 75% of the value of the assets of the fund are derived from UK property (or where all investors in the fund are exempt from UK CGT, or where the fund does not directly invest in UK property or UK property rich companies). The RIF will be a UK-based contractual fund (with a UK operator and depository), effectively an unregulated CoACS. Critically, the RIF will have many of the tax features of a Jersey unit trust (i.e. transparent for income tax purposes, but opaque for capital gains tax and stamp duty land tax purposes) but will be onshore.

Stamp duty land tax has become an unsustainably complex tax to operate for residential property transactions. We see this in the astonishing variety of different rates of SDLT that can apply. Partly as a result of this complexity (as well as the high rates), there have been attempts to exploit reliefs, particularly multiple dwellings relief (MDR) and the mixed used rates. The government’s reaction in the Budget has been to abolish MDR with effect from 1 June 2024. However, MDR is an important relief in the Build-to-Rent sector where it is used by funders on the forward funding of residential developments to reduce the cost of those developments. Instead, such BTR transactions involving 6 or more dwellings will effectively be taxed at commercial SDLT rates (up to 5%) rather than under MDR (minimum 1% rate).

The politics of the Budget were perhaps more interesting than the technical announcements. It was somewhat ironic for the Chancellor to gibe that the opposition don’t have a plan, and that his shadow is acting like a Tory – shortly before he adopted Labour’s two main revenue-raising policies: the abolition of the non-dom regime, and the extension of the energy profits levy.

Private client advisers will of course be kept busy by the repeal and replacement of the non-dom rules, and a proposal to base inheritance tax on residence, rather than domicile. However, there was less of interest for corporate tax practitioners. For me, the most significant development on Budget Day was probably the publication of new guidance on the 1.5% stamp tax rules (which were recently enacted through Schedule 11 of the Finance Act 2024, after the historic position was disturbed by the Retained EU Law (Revocation and Reform) Act 2023). The publication of this guidance follows an informal consultation with advisers. Particularly helpful is new guidance at STSM051010, which sets out HMRC’s position on the relationship between the terms “American depositary receipt” and “American depositary share”, and confirms HMRC’s practice on book entry issuances, where a physical depositary receipt may not be provided.

On the theme of HMRC working with advisers, it is encouraging to see that an expert advisory panel will be established to help inform HMRC’s approach to R&D reliefs. On the other hand, a consultation paper on raising standards in the tax advice markets envisages that we will each need to register with HMRC before being able to interact with them on behalf of a client – with the registration process seemingly involving HMRC carrying out checks on advisers’ personal tax affairs.