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Weekly tax highlights ― 17 June 2024

Weekly tax highlights ― 17 June 2024General election manifestos: key tax pledgesKey tax points from the main parties’ general election manifestos are highlighted below (covering the parties in alphabetical order).ConservativesPrincipal tax rate commitments: no increase in corporation tax or capital gains tax. Commitment to ‘not raise the rate of income tax or VAT’. Pensions tax guarantee (not to introduce any new taxes on pensions). No increase in the ‘rate or level of stamp duty to support homeowners’ (presumably the residential rates of SDLT).On business taxes, full expensing would be expanded to leasing when finances allow. The oil and gas levy would remain in place until 2028–29 ‘unless prices fall back to normal sooner’.For SMEs, a 10-point support plan includes exploring options to smooth the cliff-edge effect of the VAT registration threshold, retaining existing tax incentives including the venture capital schemes and business asset disposal relief. Existing R&D tax reliefs would be maintained and the creative sector reliefs would ‘remain competitive’.On CGT, a new two-year temporary relief for landlords who sell to their existing tenants would be introduced.On personal taxes, there would be a further two percentage point cut in NICs for employees, taking the rate of primary Class 1 contributions to 6% ‘by April 2027’, and the main rate of Class 4 NICs for the self-employed would be abolished ‘by the end of the next Parliament’.For individuals at or above state pension age, the income tax personal allowance would be unfrozen, in effect re-introducing an age-related personal allowance which

Weekly tax highlights ― 24 June 2024

Weekly tax highlights ― 24 June 2024Direct taxesCIOT comments: Budget 2024 IHT and domicile proposalsThe CIOT has issued a memorandum addressing some of the technical issues that would arise on the adoption of proposed changes to the domicile rules for IHT purposes from 6 April 2025.The CIOT supports a change to a residence-based test from a domicile-based test, but considers that ten years residence for arrivers to the UK is too short a period for full exposure to IHT on their worldwide assets. A ten-year tail for leavers is too long and should be related to the length of residence in the UK.Other issues that will need clarification include whether the ten years will include the current year, whether the ten years’ residence needs to be continuous, whether the SRT can be used to determine residence prior to 2013–14 and whether years of non-residence under a treaty tie breaker clause will count in the ten-year calculation.Consideration will need to be given to treaties and treaty relief; in particular whether domicile in a tax treaty should be interpreted as residence.Many transitional issues will need careful thought including provisions surrounding different types of leavers and arrivers.The treatment of settlements will be key. The CIOT supports the idea that their chargeability should be governed by the residence status of the settlor. In respect of existing settlements, the CIOT supports the rules which were proposed at Budget 2024 to allow