ICAS responses: Employment and devolved taxes consultations
By Justine Riccomini, Head of Tax (Employment and Devolved Taxes)
21 March 2024
Discover our responses to the latest employment and devolved tax consultations and calls for evidence from HMRC and the Scottish government.
2024 kicked off with responses needing to be submitted to several consultations from both the UK and Scottish governments on devolved and employment taxes.
Scottish Taxes
In January we responded to a call for views on Additional Dwelling Supplement (ADS) draft legislative provisions following the consultation in 2023. And measures are now being brought in from 1 April 2024. Two important issues coming out of the revisions to the Scottish legislation are:
- For domestic property, the time available between disposal of the old main residence and purchase of the new main residence has been increased on a permanent footing from 18 to 36 months. This position mirrors the rest of the UK SDLT regime, as well as the Welsh Government’s LTT regime.
- Local Authority purchases of housing stock will no longer be subject to LBTT.
Revenue Scotland will be setting out the new rules in its guidance in time for the start date.
Unfortunately, there are no transitional provisions for people caught in the middle just before this date. Therefore, it is likely that many purchasers who have disposed of a former residence up to 36 months previously will wish to wait until 1 April before finalising the purchase of their new residence.
We have been heavily involved in the formulation of draft legislation and guidance relating to the Scottish Aggregates Tax (SAT). In November 2023 the Scottish government laid the SAT Bill which is made up of two parts – the first being the legislative provisions which create the taxing powers in Scotland. The second part relates to numerous additional collection and administrative powers to delegate to Revenue Scotland relating to LBTT and across the taxes generally.
The Scottish Parliament issued a call for evidence in relation to the Bill and ICAS has been called to give evidence on 12 March after submitting a response.
In collaboration with others, we have begun working with the Scottish government on the development of the Scottish Building Safety Levy, which is a new fully devolved tax on non-domestic property. In the UK, the Building Safety Levy is being approached differently and will be administered and collected by Local Authorities. Whereas in Scotland, this work is proposed to be done by Revenue Scotland. This will classify it as a national, fully devolved tax (such as Land & Buildings Transaction Tax (LBTT)) as opposed to a local tax (such as the Workplace Parking Levy or the Visitor Levy), which requires devolved powers to be agreed to by the UK government. The Scottish government has consulted on the matter together with HM Treasury, and it is expected that powers will be granted, as the Building Safety Levy only applies to England. Further details will become available later, but we have already responded to the initial consultation.
UK employment taxes – Off-payroll working
We have responded to the consultation on the off-setting provisions under the off-payroll working legislation was recently issued with a short consultation window of four weeks.
The consultation concerned itself with the legislative provisions and guidance which will allow HMRC to offset taxes paid by individuals against PAYE and NICs deductions liable to be made by their deemed employer where they are reclassified as workers for an engager under the “off-payroll working” rules (previously IR35).
There are still minor issues to be ironed out, but overall, the measure will bring substantial equity by eliminating potential receipts of double taxation by HMRC and eradicate incorrect credits of ‘overpaid’ taxes to the wrong party. ICAS has been working on this important measure with HMRC for at least the last five years, and we are pleased with the outcome, despite the delays which were brought about by successive ministerial changes and the covid pandemic.
If you have spotted a tax anomaly that is getting in the way of doing business, why not share it with the ICAS tax team by emailing tax@icas.com
