The Government is set to introduce five new tax simplification measures to make it easier for individuals and businesses to interact with the tax system. So, what are they?

New online service to claim non-reimbursed expenses

HMRC are looking to provide a new online service for employees to claim tax relief on all their expenses in one place. Claims are currently submitted through existing online services, or via digital or paper forms, resulting in some claims being manually processed. Employer Focus will provide further details of the new service once it is available – expected later this year.

Mandating the payrolling of benefits in kind

Many employers already report and pay Income Tax and Class 1A National Insurance Contributions on employee benefits in kind through their payroll software. However, from April 2026 the Government will make it mandatory for these benefits to be reported and taxed through the payroll. HMRC will engage on the design & delivery of the change as well as obtaining input and comment on the draft legislation and guidance.

National Insurance Credit Changes

Another change being introduced from April 2026 is that parents and carers will be able to retrospectively claim National Insurance credits for tax years where they have not claimed child benefit to preserve their state pension entitlement. 

The eligibility for the credit will be based on child benefit eligibility criteria and there will be transitional arrangements to make sure that those affected since 2013 are able to claim. 

Consultation published on tax simplification for alternative finance

A consultation on proposed changes to the Capital Gains Tax (CGT) rules that apply to alternative finance arrangements has been published. The proposals look to amend the rules so that where property is used as collateral for the purposes of raising finance, the outcome for CGT is the same, regardless of whether alternative finance or conventional finance is used. Comments on the proposals should be emailed to: [email protected] by Tuesday 9 April.

Reform of the UK law in relation to transfer pricing, permanent establishment and Diverted Profits Tax

Following the consultation outcomes to reform the UK law on Transfer Pricing, Permanent Establishment and Diverted Profits Tax the Government will issue a technical consultation later this year aimed at modernising the UK’s domestic rules. Proposals include:

• Transfer Pricing: making the rules simpler, more certain, and better aligned with tax treaties. 
• Permanent Establishment: whether changes are needed to clarify the operation of the Investment Manager Exemption and Independent Broker Exemption; and
• Diverted Profit Tax: its status as a separate tax will be removed and bring an equivalent charge into Corporate Tax. This will clarify the relationship between the taxation of diverted profits and Transfer Pricing.

This article reflects the position at the date of publication (13 February 2024). If you are reading this at a later date you are advised to check that that position has not changed in the time since.  

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