Policy paper

Spring Budget 2023 — Overview of tax legislation and rates (OOTLAR)

Published 15 March 2023

Introduction

This document sets out the detail of each tax policy measure announced at Spring Budget 2023 and of previously announced measures that will be included in Spring Finance Bill 2023. It is intended for tax practitioners and others with an interest in tax policy changes, especially those who will be involved in consultations both on the policy and on draft legislation.

Spring Finance Bill 2023 will be published on 23 March 2023. The information in the document is set out as follows:

Chapter 1 contains details of all measures that are included in Spring Finance Bill 2023.

Chapter 2 contains details of measures which are part of Spring Budget 2023 but are not in Spring Finance Bill 2023.

Table 1 lists measures in this document without a corresponding announcement in the Budget report.

Annex A provides tables of tax rates and allowances for the tax year 2023 to 2024 and the tax year 2024 to 2025.

Annex B provides a guide to the impact assessments set out in tax information and impact notes.

The government will bring forward a further set of tax administration and maintenance announcements later in the spring. None of these announcements will require legislation in Spring Finance Bill 2023 or have an impact on the government’s finances at this stage.

For an update on previously announced consultations, see the tax policy consultation tracker.

Chapter 1 — Spring Finance Bill 2023

Personal Tax: Income tax, pensions and savings

1.1 Income tax charge and rate

The government will legislate in Spring Finance Bill 2023 to set the charge for income tax, and the corresponding rates, as it does every year. Spring Finance Bill 2023 will set:

  • the main rates for 2023 to 2024, which will apply to non-savings, non-dividend income of taxpayers in England, Wales, and Northern Ireland
  • the savings rates for 2023 to 2024, which will apply to savings income of all UK taxpayers
  • the default rates for 2023 to 2024, which will apply to non-savings, non-dividend income of taxpayers who are not subject to the main rates of income tax, Welsh rates of income tax or the Scottish rates of income tax

Income tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. The UK rates are reduced by 10p in £1 for Welsh taxpayers, and the Welsh rates of income tax for non-savings, non-dividend income are set by the Welsh Parliament and added to the UK rates.

1.2 Starting rate for savings limit

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to set the 0% band for the starting rate for savings income, which will remain at its current value of £5,000 for 2023 to 2024. This measure will apply to the whole of the UK.

1.3 Reforming pension tax thresholds

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to increase the Annual Allowance from £40,000 to £60,000. The Money Purchase Annual Allowance and the minimum Tapered Annual Allowance (TAA) will both be increased from £4,000 to £10,000, while the adjusted income threshold for the TAA will also be increased from £240,000 to £260,000. The government will also legislate to remove the Lifetime Allowance (LTA) charge for 2023 to 2024 in Spring Finance Bill 2023 and will deliver the technical changes necessary to abolish the LTA from April 2024 in a future Finance Bill.  The maximum Pension Commencement Lump Sum for those without relevant protections will be retained at its current level of £268,275 and will be frozen thereafter. Lump sums currently taxed for some individuals at 55% above the LTA will be taxed at an individual’s marginal rate of income tax. These changes will take effect from 6 April 2023.

The tax information and impact note for this measure provides more information: Pension tax limits.

1.4 Pensions relief relating to net pay arrangements 

As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to make top-up payments, in respect of tax year 2024 to 2025 and onwards, to individuals with a total income below the Personal Allowance saving into a pension scheme using a net pay arrangement. These top-ups will better align outcomes with equivalent savers saving into pension schemes using Relief at Source. The measure will take effect from 6 April 2025.

The tax information and impact note for this measure provides more information: Relief relating to net pay arrangements.

1.5 Collective money purchase (CMP) winding up 

The Pension Schemes Act 2021 introduced legislation to allow CMP pension schemes to operate in the UK. As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to clarify the tax treatment on transfers, periodic income and the valuation of dependant pension benefits during the wind-up of a CMP scheme. The measure will have effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Collective money purchase - winding up.

Personal Tax: Capital Gains Tax

1.6 Preventing Capital Gains Tax avoidance through share exchange

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 to address tax avoidance so that shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK.

This measure will have effect where an individual has a material interest in both the UK and the non-UK company and where the share exchanges are carried out on or after 17 November 2022.

The tax information and impact note for this measure provides more information: Capital Gains Tax - Share Exchange.

1.7 Capital gains assessment time period

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to close an avoidance loophole where an asset is disposed of under an unconditional contract. The changes will apply in relation to contracts entered into on or after 1 April 2023 for corporation tax and 6 April 2023 for Capital Gains Tax.

The tax information and impact note for this measure provides more information: Capital gains: Contracts completed after ordinary notification period.

1.8 Capital Gains Tax: allowing relief on disposals of joint interests in land and private residences for Limited Liability Partnerships (LLPs) and Scottish partnerships

As announced on 30 November 2021, the government will legislate in Spring Finance Bill 2023 to amend the legislation for Capital Gains Tax roll-over relief and private residence relief to ensure that LLPs and Scottish partnerships which hold title to land are included. The changes will apply to disposals made on or after 6 April 2023.

The tax information and impact note for this measure provides more information: Capital Gains Tax: relief on disposals of joint interests in land and private residences for limited liability partnerships and Scottish partnerships.

1.9 Capital Gains Tax: separation and divorce

As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to make changes to the rules that apply to transfers of assets between spouses and civil partners who are in the process of separating. The changes will take effect for disposals made on or after 6 April 2023.

The tax information and impact note for this measure provides more information: Capital Gains Tax - separation and divorce.

1.10 Introducing an elective accruals basis for the carried interest rules

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to provide a new elective accruals basis of taxation for carried interest. This will allow UK resident investment managers to accelerate their tax liabilities in order to align their timing with the position in other jurisdictions, where they may obtain double taxation relief. The measure will apply from 6 April 2022.

The tax information and impact note for this measure provides more information: Introducing an elective accruals basis for the carried interest rules.

Personal Tax: Other personal tax measures

1.11 Further tax provisions in connection with the Dormant Assets Scheme

As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to amend tax legislation to support the expansion of the Dormant Assets Scheme. For income tax purposes, the change will take effect from Royal Assent of Spring Finance Bill 2023. For inheritance tax purposes the change will take effect from 6 June 2022 to align with the commencement date of the Dormant Assets Act 2022.

The tax information and impact note for this measure provides more information: Tax provisions in connection with the Dormant Assets Scheme.

1.12 Taxation of new devolved social security benefits

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to introduce a new power in relation to new welfare payments or top-up payments introduced by devolved administrations. This will permit the government to confirm by Statutory Instrument when new payments are taxable as social security income within the tax year, rather than be subject to the UK parliamentary timetable. The measure will have effect from 6 April 2023.

The tax information and impact note for this measure provides more information: Income Tax: Taxation of new devolved social security benefits.

1.13 Tax treatment of payments from the Welsh Government’s Jobs Growth Wales Plus scheme

As announced on 11 October 2022, the government will legislate in Spring Finance Bill 2023 to exempt payments of the training allowance under the Welsh Government’s Jobs Growth Wales Plus scheme from income tax, with retrospective effect from 1 April 2022.

The scheme was introduced by the Welsh Government on 1 April 2022, to replace Traineeships and Jobs Growth Wales.

The tax information and impact note for this measure provides more information: Income Tax: Tax treatment of payments from the Welsh Government’s Jobs Growth Wales Plus scheme.

1.14 Qualifying Care Relief increase

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to increase the amount of income tax relief available for foster carers and shared lives carers using Qualifying Care Relief. The changes will take effect from 6 April 2023, for the tax year 2023 to 2024:

  • The annual fixed amount will increase from £10,000 to £18,140.
  • The weekly amount for children under 11 will increase from £200 to £375.
  • The weekly amount for children 11 or older and adults will increase from £250 to £450.

The fixed amount and weekly amounts will then be increased by Consumer Price Index (CPI) inflation each tax year, starting in the tax year 2024 to 2025.

The tax information and impact note for this measure provides more information: Qualifying Care Relief increase.

Corporate Tax

1.15 Corporation tax rates

At Spring Budget 2021, the government announced changes to corporation tax rates from 1 April 2023 onward. Finance Act 2021 included legislation to impose the charge to corporation tax for financial years 2022 and 2023, and to increase the main rate of corporation tax to 25% for financial year 2023 in line with the announcement at Spring Budget 2021. Legislation will be introduced in Spring Finance Bill 2023 to charge corporation tax and set the main rate at 25% and the small profits rate at 19% for the financial year beginning 1 April 2024.

1.16 Multinational top-up tax and domestic top-up tax

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 to implement the globally agreed G20-OECD Pillar 2 framework in the UK. The government will:

  • Introduce a multinational top-up tax which will require large UK headquartered multinational groups to pay a top-up tax where their operations in a foreign jurisdiction have an effective tax rate of less than 15%. The measure would also apply to non-UK headquartered groups with UK members that are partially owned by third parties or where the headquartered jurisdiction does not implement the Pillar 2 framework.
  • Introduce a supplementary domestic top-up tax which will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%.

These changes will apply to large groups with over €750 million global revenues and will take effect in relation to accounting periods beginning on or after 31 December 2023.

The tax information and impact note for this measure provides more information: Multinational top-up tax and Domestic top-up tax: UK adoption of OECD Pillar 2.

1.17 Transfer pricing documentation

As announced on 20 July 2022, the government will introduce legislation in Spring Finance Bill 2023, with supporting regulations, to require businesses operating in the UK, which are part of a large multinational enterprise (global revenues of €750 million or more), to prepare transfer pricing documentation, namely a master file and local file, in accordance with the OECD transfer pricing guidelines.

This measure will apply to accounting periods beginning on or after 1 April 2023.

In addition, HMRC will continue to consult on the introduction of a Summary Audit Trail, which would be a document detailing the steps undertaken by a UK business in preparing its transfer pricing documentation.

The tax information and impact note for this measure provides more information: New transfer pricing documentation.

1.18 Corporation tax main rate amendment for Patent Box

The government will legislate in Spring Finance Bill 2023 to ensure that the Patent Box deduction formula refers to ‘applicable rate’ rather than ‘main rate’ of corporation tax so that the correct amount of relief is given under the Patent Box for claimants whose profits are subject to the small profits rate.

The changes will take effect for accounting periods commencing on or after 1 April 2023.

The tax information and impact note for this measure provides more information: Patent Box – Corporation Tax main rate consequential amendment.

1.19 Amendments to Corporate Interest Restriction

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to address various issues in connection with the Corporate Interest Restriction rules in order to protect Exchequer revenue, remove unfair outcomes and reduce administrative burdens for businesses. In most cases, these will take effect for periods of account commencing on or after 1 April 2023.

The tax information and impact note for this measure provides more information: Amendments to Corporate Interest Restriction.

1.20 Electricity Generator Levy

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 for the Electricity Generator Levy. This new 45% charge applies from 1 January 2023 to exceptional electricity generation receipts arising from non-fossil fuel sources to corporate groups with more than 50,000 MWh of in-scope generation per annum. It applies to wholesale receipts for electricity in excess of a benchmark price of £75 per MWh. The benchmark will be adjusted in line with CPI from 1 April 2024. Exceptional receipts are calculated after deducting increases in generation fuel costs, and groups have an annual allowance of £10m.

Draft legislation and a technical note were published on 20 December 2022.

The tax information and impact note for this measure provides more information: Electricity Generator Levy.

1.21 Energy Profits Levy: decarbonisation investment allowance 

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 to set the rate of the investment allowance in the Energy Profits Levy to 80% for investment expenditure incurred on upstream decarbonisation. This change will take effect from 1 January 2023.

The government will review the use of this decarbonisation investment allowance to ensure the benefit remains purely in relation to a company’s ring fence trade, and if necessary, legislate in a future Finance Bill to provide for this. In the meantime the government will continue to engage with the sector and relevant stakeholders.

The tax information and impact note for this measure provides more information: Energy Profits Levy: Decarbonisation Allowance.

1.22 Capital allowances: full expensing

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to introduce full expensing for the next three years. Companies incurring qualifying expenditure on the provision of new plant and machinery on or after 1 April 2023 but before 1 April 2026 will be able to claim one of two temporary first-year allowances. These allowances are:

  • a 100% first-year allowance for main rate expenditure – known as full expensing; and
  • a 50% first-year allowance for special rate expenditure.

The tax information and impact note for this measure provides more information: Capital allowances: full expensing for companies investing in plant and machinery from 1 April 2023 until 31 March 2026.

1.23 Annual Investment Allowance

As announced on 23 September 2022, the government will legislate in Spring Finance Bill 2023 to make the temporary £1,000,000 limit for the Annual Investment Allowance permanent with effect from 1 April 2023. This capital allowance is available to nearly all incorporated and unincorporated businesses, covering expenditure on most plant and machinery including second-hand assets and those acquired for leasing.

The tax information and impact note for this measure provides more information: Legislating the Annual Investment Allowance (AIA) at £1m.

1.24 First-year allowance for electric vehicle charge-points 

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 to extend the first-year allowance for electric vehicle charge-points by two years. This will extend the allowance until 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

The tax information and impact note for this measure provides more information: First-year allowance for electric vehicle charge-points.

1.25 Extending the higher rates of Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR)

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to extend the current headline rates of relief for the TTR, OTR and MGETR for two years.

The rates for TTR and MGETR, which were due to taper to 30% (for non-touring productions) and 35% (for touring productions) on 1 April 2023, will remain at 45% and 50% respectively until 31 March 2025. From 1 April 2025, the rates will be 30% and 35% and rates will return to 20% and 25% on 1 April 2026.

The rates for OTR will remain at 50% for expenditure taking place from 1 April 2023, reducing to 35% from 1 April 2025 and returning to 25% from 1 April 2026.

MGETR will expire after 31 March 2026 and no expenditure after this date will be eligible for relief.

The tax information and impact note for this measure provides more information: Two-year extension of higher rates for theatre, orchestra, and museums and galleries exhibition tax reliefs.

1.26 Extension of the MGETR sunset clause

The government will legislate in Spring Finance Bill 2023 to extend the sunset clause for the MGETR for a further two years until 31 March 2026.

The tax information and impact note for this measure provides more information: Extension of the Museums and Galleries Exhibitions tax relief (MGETR) sunset clause.

1.27 Research & Development (R&D) tax relief reform

As announced at Autumn Budget 2021, the government will legislate in Spring Finance Bill 2023 to reform the R&D reliefs, the Small and Medium-sized Enterprise (SME) scheme and the R&D Expenditure Credit (RDEC).

The legislation will apply generally to accounting periods starting on or after 1 April 2023 except for the requirement to provide additional information, which will apply to all claims made on or after 1 August 2023.

It will create two new categories of qualifying expenditure for R&D tax relief, on data licences and cloud computing services.

It will mandate that companies must inform HMRC of their intention to make a claim for R&D tax relief using a new digital form. This requirement will apply for claims to relief for accounting periods starting on or after 1 April 2023. As this measure is intended to allow HMRC to perform more upfront compliance on new claimants, companies which have claimed R&D tax reliefs in the previous three years will be exempted from this requirement.

It will also require companies to provide a digital additional information form with their claims, supporting HMRC’s compliance work. This requirement, only, will apply to all claims made on or after 1 August 2023.

Changes will also be made to correct legislation which produces anomalous results.

The previously announced restriction on some overseas expenditure will now come into effect from 1 April 2024 instead of 1 April 2023. This will allow the government to consider the interaction between this restriction and the design of a potential merged R&D relief which has been consulted on recently.

The tax information and impact note for this measure provides more information: Research & Development tax relief reform changes.

1.28 Investment Zones

As announced at Spring Budget 2023, the government will establish 12 Investment Zones across the UK, subject to successful proposals. Each zone will have access to interventions of £80 million over 5 years. Building on Freeports legislation, the government will legislate in Spring Finance Bill 2023 to allow designation of special tax sites in or connected with Investment Zones. Special tax sites will be subject to approval by the government and will be designated using secondary legislation.

Once designated, special tax sites will benefit from a package of tax reliefs including Stamp Duty Land Tax (SDLT) relief, enhanced capital allowances for plant and machinery, enhanced structures and buildings allowances, and secondary Class 1 National Insurance contributions (NICs) relief. The reliefs will be time limited with the exact end date confirmed at a future date. The legislation will also provide for the power to amend the date by which conditions need to be met for the purposes of the tax reliefs and NICs relief using secondary legislation.

For special tax sites in England, SDLT relief will be made available for purchases of land or buildings, subject to that property being acquired for qualifying commercial purposes and used for such purposes in a control period of up to 3 years.

Enhanced capital allowances of 100% will be made available for companies incurring qualifying expenditure on new plant and machinery primarily for use in a special tax site.

An enhanced rate of structures and buildings allowances of 10% per year for 10 years will be made available for qualifying expenditure on non-residential structures and buildings situated in special tax sites. To qualify, construction must begin, expenditure must be incurred and the building or structure must be brought into non-residential use for the purposes of a qualifying activity between the date the special tax site is designated and the relevant end date for that site.

Secondary Class 1 NICs relief will be made available for employers with physical premises in a special tax site on the earnings of new employees who spend 60% or more of their working time within special tax sites. This rate can be applied on the earnings of all new hires up to £25,000 per year for up to 3 years.

The tax information and impact note for this measure provides more information: Investment Zone special tax sites with enhanced tax and National Insurance contributions reliefs.

1.29 Expansion of the Seed Enterprise Investment Scheme

As announced on 23 September 2022, the government will legislate in Spring Finance Bill 2023 to increase the generosity and availability of the c. The amount of investment that companies will be able to raise under the SEIS will increase from £150,000 to £250,000. To enable more companies to use the scheme, the gross asset limit will be increased from £200,000 to £350,000 and the age limit on a qualifying trade from 2 to 3 years. To support these increases, the annual investor limit will be doubled to £200,000. The changes will take effect from 6 April 2023.

The tax information and impact note for this measure provides more information: Increasing the limits of the Seed Enterprise Investment Scheme.

1.30 Reform of Company Share Option Plan (CSOP)

As announced on 23 September 2022, the government will legislate in Spring Finance Bill 2023 on changes to the CSOP rules. Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit. The ‘worth having’ restriction on share classes within CSOP will be removed, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies. The changes will take effect from 6 April 2023.

The tax information and impact note for this measure provides more information: Reform of Company Share Option Plan.

1.31 Enterprise Management Incentives (EMI): Changes to the process to grant options

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to make simplifications to the process to grant EMI options. The requirement for a company to set out details of share restrictions within the option agreement and the requirement for a company to declare an employee has signed a working time declaration will be removed.

The changes will apply to EMI options granted from 6 April 2023. Existing EMI share options granted before 6 April 2023 that have not been exercised will also benefit from the changes.

The summary of responses to a call for evidence was also published at Spring Budget 2023.

The tax information and impact note for this measure provides more information: Enterprise Management Incentives: Improvements to the Process to Grant Options.

1.32 Amendments to the rules for Real Estate Investment Trust (REIT)

As announced in the Edinburgh Reforms on 9 December 2022, the government will legislate in Spring Finance Bill 2023 to amend the REIT regime and enhance its competitiveness. The amendments will relax the requirement for a REIT to own at least three properties where a REIT owns at least one commercial property worth £20 million or more; and amend the rule for disposals of property within three years of significant development work to ensure that this rule operates in line with its original intention and is not compromised by the effects of inflation. The changes will also reduce administrative burdens for certain partnerships investing in REITs.

The changes to the three-year development rule will take effect in relation to disposals made from 1 April 2023. The other changes will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Corporation Tax: Real Estate Investment Trusts (REITs).

1.33 Amendments to the Qualifying Asset Holding Companies (QAHC) rules

As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to amend the QAHC rules so that the conditions that must be met by a company to qualify as a QAHC better align with the intended scope of the regime and the rules better achieve their intended effect. Changes will variously take effect from Royal Assent of Spring Finance Bill 2023, 20 July 2022 and 15 March 2023, or are deemed to have always had effect.

The tax information and impact note for this measure provides more information: Amendments to the Qualifying Asset Holding Companies (QAHC) rules.

1.34 Amendments to the Genuine Diversity of Ownership (GDO) condition

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to amend the GDO condition in the QAHC, REIT and Non-Resident Chargeable Gains (NRCG) rules. The GDO condition is intended to prevent funds that are only open to a small number of predetermined investors from benefitting from those regimes. The changes will improve the operation of the GDO condition for fund structures involving multiple pooling vehicles and will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Amendments to the Genuine Diversity of Ownership (GDO) condition.

1.35 Double taxation relief: time limit for claims

As announced on 20 July 2022, the government will legislate in Spring Finance Bill 2023 to limit certain extended time limit claims for double tax relief calculated by reference to the foreign nominal rate of tax. This measure took effect from the date of announcement on 20 July 2022.

The tax information and impact note for this measure provides more information: Double taxation relief: time limit for claims.

1.36 Life insurance taxation: transfers and reinsurance of long-term business

As announced on 15 December 2022, the government will legislate in Spring Finance Bill 2023 to address the risk of a tax mismatch in the life insurance rules where re-insurance precedes a transfer of Basic Life Assurance and General Annuity Business (BLAGAB). The measure will also address an industry concern that the scope of an existing rule may be unnecessarily wide and is blocking commercial transactions. This measure has effect from 15 December 2022.

The tax information and impact note for this measure provides more information: Reinsurance in the course of transfers of long-term business.

1.37 Write-downs for annuities products and insurers’ liabilities

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to address the pensions tax and corporation tax consequences of write-downs of liabilities of insurers in financial distress under the proposed new section 377A Financial Services and Markets Act 2000, and any subsequent court-ordered variation or termination of those write down-orders.

The measure will take effect from Royal Assent of Spring Finance Bill 2023. Additional consequential pensions tax changes will be legislated by Statutory Instrument.

The tax information and impact note for this measure provides more information: Write-downs for annuities products and insurers’ liabilities.

Indirect Tax

1.38 Alcohol duty reform

As confirmed at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to make changes to the duty structure for alcohol products. These changes will take effect from 1 August 2023. HMRC will also take forward plans to modernise the approval, return and payment processes for domestic producers of alcohol products. These changes are currently scheduled to take effect from late 2024 with the introduction of a new digital system.

1.39 Alcohol duty rates

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to increase the duty rates under the revised structure on all alcoholic products produced in, or imported into, the UK in line with the Retail Price Index (RPI). The government will also legislate to increase the new Draught Relief from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, spirits based and other fermented products. These changes will take effect from 1 August 2023.

The tax information and impact note for this measure provides more information Alcohol duty rates.

1.40 Tobacco duty rates 

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to:

  • increase the duty rates for all tobacco products by the tobacco duty escalator of 2% above RPI inflation
  • increase the rate for hand-rolling tobacco by an additional 4% above the escalator, to 6% above RPI inflation
  • increase the Minimum Excise Tax (MET) by an additional 1% above the escalator, to 3% above RPI inflation

The changes will take effect from 6pm on 15 March 2023. The rates and updated MET level are set out in Annex A.

The tax information and impact note for this measure provides more information: Changes to tobacco duty rates from 15 March 2023.

1.41 Air Passenger Duty (APD): banding reforms and rates for 2023 to 2024 

As announced at Autumn Budget 2021, the government will legislate in Spring Finance Bill 2023 to introduce a new domestic band for APD to support UK connectivity, and a new ultra long-haul band to align APD more closely with the government’s environmental objectives. These changes take effect from 1 April 2023.

The full list of rates of APD are set out in Annex A.

The tax information and impact note for this measure provides more information: Air Passenger Duty (APD): banding reforms and rates from 1 April 2023 to 31 March 2024.

1.42 Vehicle Excise Duty (VED)

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to increase VED rates for cars, vans and motorcycles in line with RPI with effect from 1 April 2023. To support the haulage sector, VED for Heavy Goods Vehicles (HGV) will remain frozen for 2023 to 2024.

VED rates are set out in Annex A.

The tax information and impact note for this measure provides more information: Vehicle Excise Duty rates for cars, vans and motorcycles from April 2023.

1.43 Reform of HGV levy

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to introduce a new reformed HGV levy from August 2023. The reforms to the HGV levy are a further step towards reflecting the environmental performance of the vehicle. For foreign-registered vehicles, the reforms also ensure that the levy is focused on road usage and that it is more clearly aligned with the government’s international obligations.

Following a consultation on these changes in June 2022, the government response was published at Spring Budget 2023.

The tax information and impact note for this measure provides more information: Heavy Goods Vehicle (HGV) levy: introduction of new reformed levy.

1.44 Amendments to entitlement to use rebated fuels

The government will legislate in Spring Finance Bill 2023 to make minor amendments to restrictions on the use of rebated (red) diesel and rebated biofuels. The original restrictions were legislated for in Finance Act 2021 and amended by Finance Act 2022.

The changes that take effect from 6pm on 15 March 2023 permit the use of rebated fuel in tractors and gear used by charities for launching lifeboats and in machines used for arboriculture, and extend entitlement to use rebated fuel to machines used primarily for providing heat and electricity for non-commercial premises. A minor amendment to a reference in primary legislation will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Amendments to entitlement to use rebated fuels.

1.45 Aggregates Levy reform

The government will legislate in Spring Finance Bill 2023 to reform aggregates levy exemptions affecting aggregate (rock, sand and gravel) extracted during construction works.

The two-part measure will tax previously untaxed aggregate extracted for use on construction sites. It will also simplify and extend exemptions for by-product aggregate arising unavoidably from construction projects.

The government consulted on the changes in Spring 2021 and published draft legislation on 20 July 2022. The changes will take effect from 1 October 2023, rather than 1 April 2023 as indicated in the draft legislation, to give affected businesses time to prepare.

The tax information and impact note for this measure provides more information: Aggregates levy changes affecting aggregate from construction sites.

1.46 Landfill Tax rates for 2023 to 2024

As announced at Autumn Budget 2021, the government will legislate in Spring Finance Bill 2023 to increase the standard and lower rates of Landfill Tax in line with RPI, rounded to the nearest 5 pence. The change will take effect from 1 April 2023 as set out in Annex A.

The tax information and impact note for this measure provides more information: Landfill Tax: increase in rates.

1.47 Climate Change Levy (CCL): changes to rates from 1 April 2024

The government will legislate in Spring Finance Bill 2023 to increase the main rates of CCL for gas and solid fuels. The gas rate will be aligned with that for electricity and the rate for solid fuels will increase proportionally to the gas rate increase. The CCL main rates on electricity and liquefied petroleum gas (LPG) will continue to be frozen for 2024 to 2025.

The Spring Finance Bill 2023 will also adjust the reduced rates of CCL on gas and solid fuels for qualifying businesses in the Climate Change Agreement scheme. These businesses will pay no more tax on these fuels than had the main rates for these fuels been increased by the RPI. The reduced rates on electricity and LPG will be frozen at 2023 to 2024 levels in 2024 to 2025.

Amended main and reduced rates all take effect on 1 April 2024.

The rates of CCL for years 2022 to 2023, 2023 to 2024 and 2024 to 2025 are set out in Annex A.

The tax information and impact note for this measure provides more information: Climate Change Levy: changes to rates from 1 April 2024.

1.48 Plastic Packaging Tax rate

As announced at Spring Budget 2023, the government will legislate in the Spring Finance Bill 2023 to increase the rate of Plastic Packaging Tax in line with CPI. The change will take effect from 1 April 2023. The rates are set out in Annex A.

The tax information and impact note for this measure provides more information: Plastic Packaging Tax rate change from 1 April 2023.

1.49 Plastic Packaging Tax amendment to penalties for late payment tax

The government will legislate in the Spring Finance Bill 2023 to amend the penalty rules for late payment of Plastic Packaging Tax to ensure that all late payments are treated consistently.

The tax information and impact note for this measure provides more information: Changes to Plastic Packaging Tax late payment penalties.

1.50 Soft Drinks Industry Levy: concentrates mixed with sugar when dispensed

The government will legislate in Spring Finance Bill 2023 to amend the definition of a soft drink liable to the Soft Drinks Industry Levy to include concentrates which are mixed with sugar when dispensed.

Following publication of draft legislation on 20 July 2022, powers to make regulations will be included to provide the appropriate flexibility for future changes.

The changes will take effect from 1 April 2023.

The tax information and impact note for this measure provides more information: Soft Drinks Industry Levy - concentrates mixed with sugar when dispensed.

1.51 VAT and Deposit Return Schemes 

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 for simplifications to the VAT treatment of deposits charged under a drink container deposit return scheme.

The tax information and impact note for this measure provides more information: VAT Provisions for Drink Deposit Return Schemes.

1.52 Temporary approvals for certain excise regimes

As announced at Spring Budget 2023, the government will amend legislation which allows businesses to continue trading during the review or appeal period where their excise approval has been revoked by HMRC. The amendment will extend businesses’ ability to trade for a short period where they are unsuccessful in overturning HMRC’s decision. This is so businesses can legally dispose of stock without incurring a penalty. The amendment will be legislated for in Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Excise-Temporary Approvals.

1.53 Insurance Premium Tax (IPT): power to make regulations by references to notices

As announced on 30 November 2021, the government will legislate in Spring Finance Bill 2023 to broaden existing powers to allow HMRC to move IPT forms from secondary legislation and into a public notice by way of a Statutory Instrument. This will make it easier to make administrative updates to the forms without the need for legislation, and also provides a necessary step for any future legislation allowing HMRC to further digitise the IPT forms.

This measure will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Insurance Premium Tax: power to make regulations by references to notices.

Tax Administration and other measures

1.54 Simplifications for trusts and estates

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to simplify how income tax applies to trusts, estates and their beneficiaries. These changes will take effect from 6 April 2024. Some technical clarifications relating to estate beneficiaries will also be made for tax year 2023 to 2024 onwards. HMRC also intend to make changes to inheritance tax regulations during 2023 to 2024 to remove some non-taxpaying trusts from reporting requirements.

The tax information and impact note for this measure provides more information: Estates in administration and trusts.

1.55 Abolition of the Office of Tax Simplification

As announced on 23 September 2022, the government will legislate in Spring Finance Bill 2023 to abolish the Office of Tax Simplification. The legislation will have effect from Royal Assent of Spring Finance Bill 2023.

1.56 Penalty reform for VAT: technical changes to late payment interest, late payment penalties, and repayment interest rules for VAT

The government will legislate in Spring Finance Bill 2023 to amend the basis for the accrual of late payment interest on certain VAT amounts due (amounts not paid and overclaimed amounts recoverable) to ensure interest is charged, and any late payment penalty applied, as intended. The changes for late payment interest come into effect from 15 March 2023, and for late payment penalties from 1 January 2023. The government will also remove certain provisions in the Finance Act 2009 relating to repayment interest on VAT credits, which were not commenced. This change will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Technical changes to late payment interest, late payment penalties and repayment interest rules for VAT.

1.57 New tax checks for licence renewal applications in Scotland and Northern Ireland

As announced at Autumn Statement 2022, the government will legislate in Spring Finance Bill 2023 to make the renewal of certain licences in Scotland and Northern Ireland conditional on applicants completing checks that confirm they are appropriately registered for tax.

In Scotland, this will apply to licences to drive taxis and private hire cars, operate from booking offices, and operate as a metal dealer. In Northern Ireland, this will apply to licences to drive taxis.

Licensing bodies will have to obtain confirmation that an applicant has completed the check before making a decision on their renewal application, making it more difficult for non-compliant traders to operate in the hidden economy. These changes will take effect from 2 October 2023. This extends existing reforms that have applied to taxi, private hire vehicle, and scrap metal licensing in England and Wales since 4 April 2022.

The tax information and impact note for this measure provides more information: New tax checks for licence renewal applications in Scotland and Northern Ireland.

1.58 Rendering void assignments of income tax repayments

As announced on 11 January 2023, the government will render void assignments of income tax repayments. This will be legislated for in Spring Finance Bill 2023 and ensure taxpayers can no longer legally assign their income tax repayments to a third party such as an agent. These changes apply UK-wide and mean that assignments of income tax repayments received by HMRC on or after the 15 March 2023 will be legally invalid.

The tax information and impact note for this measure provides more information: Rendering void assignments of income tax repayments.

1.59 OECD Mandatory Disclosure Rules (MDR), technical amendment to primary legislation and Automatic Exchange of Information (AEOI) powers consolidation

The government will legislate in Spring Finance Bill 2023 to consolidate five powers that allow AEOI regulations to be laid. AEOI regulations enable the automatic exchange of tax information between jurisdictions to support compliance, in line with international agreements. These powers cover the MDR, the Common Reporting Standard (CRS), Foreign Account Tax Compliance Act (FATCA), Country by Country Reporting (CbCR) and Reporting Rules for Digital Platforms (DP) regulations. All perform similar functions and are currently in various Finance Acts.

This measure will consolidate these powers into one provision to simplify the legislation, and the previous powers will be repealed once this consolidation has happened. At the same time there will be a technical amendment to the power that allows MDR regulations to be laid so that these regulations work as intended.

This measure will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: OECD Mandatory Disclosure Rules, technical amendment to primary legislation and Automatic Exchange of Information (AEOI) powers consolidation.

1.60 Restriction of charitable reliefs to UK charities

As announced at Spring Budget 2023, the government will legislate in Spring Finance Bill 2023 to restrict UK charity tax reliefs and exemptions to UK charities and Community Amateur Sports Clubs (CASCs). The taxes affected are income tax, Capital Gains Tax, corporation tax, inheritance tax, Stamp Duty, SDLT, Stamp Duty Reserve Tax, Annual Tax on Enveloped Dwellings (ATED) and Diverted Profits Tax.

The change will come into effect from 15 March 2023, and will apply UK-wide. Non-UK charities and CASCs that HMRC has accepted qualify for charity tax reliefs will have a transitional period until April 2024.

The tax information and impact note for this measure provides more information: Restriction of charitable reliefs to UK charities.

1.61 Amendment to the Customs and Excise Act 1979 - control of movement of Aircraft into and out of the UK

The government will legislate in Spring Finance Bill 2023 to improve the approval and enforcement regime for aerodromes which handle international movements of people and goods. This legislation will have effect from Royal Assent of Spring Finance Bill 2023. However, approvals under this legislation will not be put into practice until 1 January 2024 onwards.

The tax information and impact note for this measure provides more information: Amendment to the Customs and Excise Management Act 1979 - control of movement of aircraft into and out of the UK.

1.62 Introduction of Customs Advance Valuation Rulings

The government will legislate in Spring Finance Bill 2023 to provide the means to introduce Advance Valuation Rulings. Advance Valuation Rulings are written decisions made by customs authorities at the request of a trader that are legally binding on both parties. They are a trade facilitation and are not mandatory. These rulings will provide traders with certainty on the valuation method that determines the customs value of goods they are importing into the UK. This will provide reassurance that the valuation method is correct and will assist in the completion of customs declarations.

The tax information and impact note for this measure provides more information: Import Duty: rulings as to method of valuation of goods.

1.63 Discretionary guarantees on delivery of imported goods

The government will legislate in Spring Finance Bill 2023 to enable traders to request a review of, or appeal against, a decision by HMRC to require a financial guarantee as a condition of releasing imported goods from customs control in circumstances where the amount of duty due is not clear when a customs declaration is accepted by HMRC. The legislation will also bring provisions relating to these guarantees within the framework of legislation covering other forms of customs guarantee.

This measure will take effect from Royal Assent of Spring Finance Bill 2023.

The tax information and impact note for this measure provides more information: Customs – reviews and appeals against discretionary guarantees.

1.64 Trade remedies reform

As announced on 9 March 2023 by the Department for Business and Trade (DBT) Secretary of State, the government will legislate in the Spring Finance Bill 2023 to make changes to the existing trade remedies legislation. These will allow for a greater flow of information between the Trade Remedies Authority (TRA) and Ministers and provide greater flexibility for Ministers when taking evidence-based decisions on trade remedy measures. It will also provide Ministers the power to ask the TRA to reassess recommendations or determinations before Ministers make a decision, allow the TRA to provide options within its recommendations, allow Ministers the power to revoke trade remedies measures without a TRA recommendation and for Ministers to apply alternative provision and final remedies to that recommended by the TRA, where justified to do so. The DBT will bring forward further implementing legislation in due course.

1.65 Trade remedies reimbursement

The government will legislate to provide powers for the Secretary of State to make secondary legislation relating to the repayment or collection of duties following a review of a trade remedies measure. These provisions do not, in themselves, change the current trade remedies framework as it applies to businesses, instead they provide legal powers for the government to make subsequent legislation to allow for the reimbursement or collection of monies under our trade remedies framework in certain circumstances. The changes will take effect following Royal Assent of Spring Finance Bill 2023.

1.66 Bilateral safeguarding measures

The government will legislate in the Spring Finance Bill 2023 to set out the role of the TRA and the government in investigating and implementing bilateral safeguard measures which the UK has agreed with our Free Trade Agreement partners. The provisions will enable Ministers to direct the TRA to open an investigation to determine whether the requirements to apply a bilateral safeguard measure are met and to recommend the form a potential measure should take. It will provide Ministers with the power to apply a measure, to ask the TRA to reassess its determination, and enable Ministers to take a different decision to that recommendation on public interest grounds. The DBT will bring forward further implementing legislation in due course.

1.67 Homes for Ukraine: Property Tax exemptions and reliefs

As announced on 31 March 2022, the government will legislate in Spring Finance Bill 2023 to introduce temporary reliefs from the ATED and the 15% rate of SDLT for dwellings made available for occupation by individuals granted entry clearance or permission to stay in the UK under the Homes for Ukraine Sponsorship Scheme. For ATED, the relief will apply to chargeable periods beginning on or after 1 April 2022 and for SDLT, the relief will have retrospective effect from 31 March 2022.

On 14 December 2022, the Department for Levelling Up, Communities and Housing (DLUHC) announced an additional £500m of funding for Local Authorities to help secure housing stock for those fleeing conflict. This additional funding is allocated under section 31 of the Local Government Act 2003 (LGA 2003). The government will legislate in Spring Finance Bill 2023 to amend the SDLT Registered Social Landlord exemption to ensure that purchases made with the assistance of section 31 LGA 2003 funding to secure additional social housing stock are not subject to SDLT.

The tax information and impact note for this measure provides more information: Homes for Ukraine: Reliefs and exemptions from Stamp Duty Land Tax and the Annual Tax on Enveloped Dwellings.

1.68 Homes for Ukraine: income tax and corporation tax exemption

As announced on 31 March 2022, the government will legislate in Spring Finance Bill 2023 to exempt ‘thank you’ payments made by Local Authorities to sponsors under the Homes for Ukraine scheme from income tax and corporation tax.

The measure will have retrospective effect from 14 March 2022 when the sponsorship scheme was launched.

The tax information and impact note for this measure provides more information: Income Tax and Corporation Tax Exemption of Payments made to sponsors under the Homes for Ukraine scheme.

1.69 Taxation of Lump Sum Exit Scheme payment

As announced on 8 February 2022, the government will legislate in Spring Finance Bill 2023 to clarify that payments received by retiring farmers relating to an eligible claim under the Lump Sum Exit Scheme are treated as capital receipts.

Draft legislation was published for consultation on 20 July 2022. Minor changes have been made to the draft legislation to ensure it applies to all relevant payments as intended.

The tax information and impact note for this measure provides more information: Taxation of the Lump Sum Exit Scheme payments.

1.70 Strengthening HMRC’s ability to implement Financial Sanctions

The government will legislate in Spring Finance Bill 2023 to clarify the exercise of HMRC’s functions in relation to Designated Persons subject to financial sanctions as defined by the Sanctions and Anti-Money Laundering Act 2018.

This legislation ensures any future changes to UK sanctions legislation concerning Designated Persons subject to financial sanctions are automatically reflected in the exercise of HMRC’s functions.

The tax information and impact note for this measure provides more information: Strengthening legislation to implement financial sanctions.

Chapter 2 — Measures announced at Spring Budget 2023 but not in Spring Finance Bill 2023

This chapter contains details of other tax measures announced at Spring Budget 2023 but are not in Spring Finance Bill 2023. This includes consultations and measures that will be legislated by secondary legislation and future Finance Bills.

Personal Tax

2.1 Individual Savings Account (ISA) annual subscription limit

As announced at Spring Budget 2023, the adult ISA annual subscription limit for 2023 to 2024 will remain unchanged at £20,000. This measure will apply to the whole of the UK.

2.2 Child Trust Funds annual subscription limit

As announced at Spring Budget 2023, the annual subscription limit for Child Trust Funds for 2023 to 2024 will remain unchanged at £9,000. This measure will apply to the whole of the UK.

2.3 Junior ISA annual subscription limit

As announced at Spring Budget 2023, the annual subscription limit for Junior ISAs for 2023 to 2024 will remain unchanged at £9,000. This measure will apply to the whole of the UK.

2.4 Implications of Retained European Law on ISA and Child Trust Fund Legislation

As announced at Spring Budget 2023, the government will legislate by Statutory Instrument to restrict the eligibility to manage ISA and Child Trust Funds to financial institutions with a UK presence. The change will take effect from April 2024.

2.5 Pensions tax administration – digitalising Relief at Source

The government will legislate in a future Finance Bill to improve the administration of pension tax relief. This will enable the digitalisation of the current paper processes for Relief at Source, improving the experience for pension scheme administrators and reducing errors.

Draft legislation will be published for consultation in summer 2023.

2.6 Linking open and closed public service pension schemes

As announced at Spring Budget 2023, the government will introduce secondary legislation that treat different public service pension schemes for each public service workforce as one arrangement for the purposes of calculating the pension input amount and associated Annual Allowance charges.

The government will consult on this legislation in due course and the legislation will have effect from the 2023 to 2024 tax year.

2.7 Taxation of social security benefits: Carer Support Payment

As announced at Spring Budget 2023, the government will legislate by secondary legislation to clarify the tax treatment of the Scottish Government’s Carer Support Payment as taxable as a social security income. The Carer Support Payment was announced by the Scottish Government on 7 February 2023.

2.8 Taxation of environmental land management and ecosystem service markets  

As announced at Spring Budget 2023, the government is publishing a call for evidence and consultation to explore both the taxation of ecosystem service markets and the potential expansion of agricultural property relief from inheritance tax to cover certain types of environmental land management.

2.9 Geographical scope of agricultural property relief and woodlands relief from inheritance tax

As announced at Spring Budget 2023, the government will introduce legislation in Finance Bill 2023-24 to restrict the scope of agricultural property relief and woodlands relief to property in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK. The changes will take effect from 6 April 2024.

Corporate Tax

2.10 Additional Tax Relief for R&D intensive SMEs

As announced at Spring Budget 2023, the government will legislate in a Finance Bill 2023-24 to provide additional R&D tax relief for eligible R&D intensive SMEs.

A new credit rate will be available to loss-making companies whose R&D expenditure constitutes at least 40% of total expenditure. Qualifying companies will be able to claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the 10% credit rate for companies claiming support under the existing R&D SME scheme.

The changes will take effect from 1 April 2023, with eligible companies able to claim once legislation is in place.

The government has also published a technical note setting out how this measure works in greater detail. Draft legislation will be published for technical consultation in summer 2023.

2.11 Update on ongoing R&D tax reliefs review

Alongside changes to R&D tax reliefs announced at Spring Budget 2023, the government continues to review how the reliefs are operating and where they can be improved. Set out below is an update on a range of issues that have been subject to recent consultation and discussion with stakeholders:

  • The government’s consultation on merging the RDEC and SME schemes closed on 13 March 2023. The government is currently considering the responses and no decision has been made. The government intends to keep open the option of implementing a merged scheme from April 2024. The government will publish draft legislation on a merged scheme for technical consultation in summer 2023, with a summary of responses to the consultation. Any further changes as a part of the ongoing R&D tax reliefs review will be announced at a future fiscal event, including a final decision on whether to merge the RDEC and SME schemes.

  • Separately HMRC has agreed to provide a more accurate estimate of the error and fraud to the Public Accounts Committee by summer 2023. This will be alongside a clear action plan to reduce error and fraud. Any further measures to combat error and fraud will be announced separately.

2.12 Reforming film, TV and video games tax reliefs to refundable expenditure credits

As announced at Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to reform the film, TV and video games tax reliefs to refundable expenditure credits. The design of the expenditure credits will be based on the RDEC. Full details of the expenditure credits will be published alongside draft legislation in summer 2023 and stakeholders will be able to comment.

The government will legislate two expenditure credits:

  • Audio-Visual Expenditure Credit - to cover the four existing film and TV tax reliefs. The existing specific eligibility criteria of each relief will be preserved.
  • Video Games Expenditure Credit.

Video games, film and high-end TV will have a rate of 34%. Animation and children’s TV will have a rate of 39%.

The reform to expenditure credits will change the way that relief is calculated. The expenditure credits will be calculated directly from qualifying expenditure instead of being an adjustment to the company’s taxable profit as under the existing regime.

The expenditure credits will be available for companies to claim in respect of accounting periods ending on or after 1 January 2024. Productions that have claimed relief under the current system will be able to opt into the new regime.

The current tax reliefs will close to new productions from 1 April 2025. Films and TV programmes that have not concluded principal photography, and video games that have not concluded development by 1 April 2025 may continue to claim relief under the current regime until 31 March 2027.

2.13 Reforms to high-end TV tax relief

As announced at Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to reduce the minimum slot length required for a high-end TV production to be eligible for the Audio-Visual Expenditure Credit. The minimum slot length will be reduced from 30 to 20 minutes. This legislation will apply to every individual episode. This change will take effect from 1 January 2024. The current minimum slot length legislation for the existing high end TV tax relief will remain unchanged.

The government will legislate in Finance Bill 2023-24 a definition of a documentary.

The summary of responses to the consultation on audio-visual tax reliefs provides more information. The government will publish draft legislation for the definition in summer 2023.

2.14 Reforms to video games tax relief

The government will legislate in Finance Bill 2023-24 to introduce the Video Games Expenditure Credit from 1 January 2024.

This credit will differ from the existing video games tax relief regime in terms of the type of expenditure that will qualify for relief. Expenditure will only qualify if it is on ‘goods and services that are used or consumed in the UK.’

Games in development at 1 April 2025 may continue to claim the existing video games tax relief and will therefore still be able to claim on ‘expenditure that is incurred on goods and services provided from within the UK or EEA’ until 31 March 2027, when the relief will sunset.

The eligibility requirements for the Video Games Expenditure credit will require 10% of expenditure to be on goods and services that are used or consumed in the UK from its introduction on 1 January 2024.

2.15 Removing EEA expenditure in theatre, orchestra and museum and galleries exhibition tax reliefs

As announced at Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to change the type of expenditure that will qualify for theatre, orchestra and museums and galleries exhibition tax relief.

From 1 April 2024, the definition of qualifying expenditure will be changed from ‘expenditure that is incurred on goods and services provided from within the UK or EEA’, to ‘expenditure on goods and services that are used or consumed in the UK.’

The eligibility requirement for the reliefs will be changed to require a minimum 10% of expenditure to be on ‘goods and services used or consumed in the UK.’ This will replace the existing requirement for at least 25% of core costs to be incurred on goods and services from within the UK or EEA.

From 1 April 2024 no new theatrical or orchestral productions, or museum and gallery exhibitions will be permitted to claim EEA expenditure under the old definition.

Productions that have not concluded by 1 April 2024 will be permitted to continue to claim EEA expenditure under the old definition until 31 March 2025.

2.16 Creative tax reliefs reform — administrative changes

The government will legislate in Finance Bill 2023-2024 several administrative changes to all eight of the creative industry tax reliefs to address unintended consequences and improve compliance. This will include an anti-abuse measure on payments between connected parties. Draft legislation will be published in summer 2023 for consultation. The changes will take effect from January 2024.

2.17 Consultation on occupational health tax incentives

As announced at Spring Budget 2023, the government will consult on options to increase investment in occupational health services by employers through the tax system, including a potential expansion of the existing benefits in kind for occupational health services or a potential super-deduction style relief for businesses who provide services to their employees.

2.18 Non-discretionary tax advantaged share scheme call for evidence

As announced at Spring Budget 2023, the government will be launching a call for evidence on the Share Incentive Plan and Save As You Earn employee share schemes. The government will use the call for evidence to consider opportunities to improve and simplify the schemes.

2.19 Social Investment Tax Relief (SITR) expiry

As announced at Spring Budget 2023, the government will not renew the SITR, following the end of the previous two-year extension. The SITR will close to any new investments from 6 April 2023.

2.20 Community Investment Tax Relief (CITR) expansion

As announced at Spring Budget 2023, the government will legislate in Spring 2023 by Statutory Instrument to expand the limits that apply to the funds that can be raised and deployed by accredited Community Development Finance Institutions using the CITR scheme.

2.21 Carbon Capture, Usage and Storage (CCUS): tax treatment of payments into decommissioning funds

As announced at Spring Budget 2023, the government will legislate in a future Finance Bill on the tax consequences of oil and gas companies making payments into decommissioning funds where this relates to the repurposing of assets within the oil and gas corporation tax ring-fence for use in CCUS activities.

The changes will take effect at a future date, following Royal Assent of the Energy Bill.

2.22 Tonnage Tax – increase capital allowance for leasing, open an election window, inclusion of ship management

As announced at Autumn Budget 2021, the government will allow shipping companies to benefit from the reforms to Tonnage Tax by opening an election window which permits shipping companies that have left the Tonnage Tax regime to return to the UK.

The government will legislate by Statutory Instrument to ensure this election window is opened in June 2023 for 18 months.

The government will also legislate in Finance Bill 2023-24 to permit third party ship management companies to join the Tonnage Tax regime and raise the limit on capital allowances to £200m for lessors of ships into the regime. These measures will take effect from 1 April 2024.

Indirect Tax

2.23 Fuel Duty rates

As announced at Spring Budget 2023, the government will legislate by Statutory Instrument to extend the cut in the rates of Fuel Duty introduced at Spring Statement in March 2022 for a further 12 months. This will maintain the cut in the rates for heavy oil (diesel and kerosene), unleaded petrol, and light oil by 5 pence per litre (ppl), and the proportionate percentage cut (equivalent to 5ppl from the main Fuel Duty rate of 57.95ppl) in other lower rates and the rates for rebated fuels, where practical. The changes will take effect from 23 March 2023. The rates are set out in Annex A.

The tax information and impact note for this measure provides more information: Temporary extension to the cut in Fuel Duty rates.

2.24 APD rates for 2024 to 2025

As announced at Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to increase APD rates in line with inflation, based on RPI. As APD rates are rounded to the nearest pound, short -haul international rates will not rise. The new rates will apply from 1 April 2024. The full list of APD rates is set out in Annex A.

2.25 Gaming duty

As announced at Spring Budget 2023, the Gross Gaming Yield bandings used to determine the rate of gaming duty will be frozen from 1 April 2023.

2.26 Aggregates Levy rate for 2023 to 2024 and 2024 to 2025

As announced at Spring Budget 2023, the government will freeze the Aggregates Levy rate in 2023 to 2024.

The government will also legislate in Finance Bill 2023-24 to increase the Aggregates Levy in line with RPI. The change will take effect from 1 April 2024.

Aggregates Levy rates are set out in Annex A.

2.27 Landfill Tax: rates for 2024 to 2025

As announced at Spring Budget 2023, the government will legislate in Finance Bill 2023-24 to increase the standard and lower rates of Landfill Tax in line with RPI, rounded to the nearest 5 pence. The change will take effect from 1 April 2024, as set out in Annex A.

2.28 Landfill Community Fund Value 2023

The government will set the value of the Landfill Communities Fund for 2023 to 2024 at £32.9 million, with the cap on contributions by landfill operators remaining at 5.3% of their Landfill Tax liability.

2.29 Landfill Tax Review

As announced at Spring Budget 2023, the government is publishing a response to the call for evidence on aspects of Landfill Tax, which closed in February 2022. This confirms the government will continue engagement with stakeholders before making further announcements in due course.

2.30 Two-year extension of the Climate Change Agreement scheme

As announced at Spring Budget 2023, the government will extend the Climate Change Agreement (CCA) scheme by two years. This will provide access to reduced CCL rates from 1 April 2025 to 31 March 2027 to eligible energy intensive businesses that meet energy efficiency improvement targets in 2024.

A consultation on the detail of the scheme extension and proposals for any potential scheme beyond 31 March 2027 will be published by the Department for Energy Security and Net Zero (DESNZ) on 15 March 2023.

2.31 VAT relief for energy saving materials – improving energy efficiency and reducing carbon emissions

As announced at Spring Budget 2023, the government is publishing a call for evidence on options to reform the VAT relief for the installation of energy saving materials. This will consider the inclusion of additional technologies and the possible extension of the relief to include buildings used for a relevant charitable purpose. The call for evidence will close on 31 May 2023.

2.32 VAT: services directly supervised by pharmacists

As announced at Spring Budget 2023, the government will legislate by Statutory Instrument to extend the VAT exemption for healthcare to include services carried out by staff directly supervised by registered pharmacists in the UK. The changes will take effect from 1 May 2023.

2.33 Extending the zero rate of VAT for medicines dispensed on prescription

As announced at Spring Budget 2023, the government will extend the zero rate of VAT on prescriptions for medicines supplied through Patient Group Directions. This measure will be introduced in autumn 2023.

2.34 VAT: fund management review

As announced at Spring Budget 2023, following the consultation on proposed reform of the VAT rules on fund management to improve legal clarity and certainty, which closed in February, the government is considering the responses and continuing to discuss the proposals with interested stakeholders. The government will publish its response to the consultation in the coming months.

2.35 Review of VAT treatment of financial services

As announced at Spring Budget 2023, building on the recommendations of the industry working group established to consider the future of VAT and financial services, the government will continue working with industry stakeholders to consider possible reforms to simplify the VAT treatment of financial services, reducing inconsistencies and providing businesses with greater clarity and certainty.

2.36 VAT: DIY Housebuilders Scheme Digitisation Project 

As announced at Spring Budget 2023, the government will legislate to digitise the VAT DIY housebuilders’ scheme and will also extend the time limit for making claims from 3 to 6 months. These measures should improve the overall customer experience, reducing the administrative burden for both claimants and HMRC.

Tax Administration and Other Measures

2.37 Cash basis reform

As announced at Spring Budget 2023, the government will consult on reforming the cash basis for the self-employed, a simplified way of calculating taxable profits for income tax purposes.

The government is interested in ways to increase the number of eligible businesses and how to increase use of the cash basis within the eligible population, to ensure as many businesses are benefitting from this simplification. The consultation will focus on the four following policy proposals, but welcomes other ideas to increase the number of businesses using the cash basis:

  • Increasing the turnover thresholds for businesses to use the cash basis
  • Setting the cash basis as the default, with an opt-out for accruals
  • Increasing the £500 limit on interest deductions in the cash basis
  • Relaxing restrictions on using relief for losses made in the cash basis

2.38 Tax Administration Framework Review: Modernising income tax services

As announced at Spring Budget 2023, the government is publishing a discussion document exploring how HMRC can simplify and modernise HMRC’s income tax services as part of its Tax Administration Framework Review. This sets out HMRC’s intention to move to a “digital by default” approach for some of its outputs, seeks views on improving Pay As You Earn processes, and launches a review of the Income Tax Self Assessment criteria.

2.39 Tackling promoters of tax avoidance

As announced at Spring Budget 2023, the government will consult shortly on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme. The government will also consult on expediting the disqualification of directors of companies involved in promoting tax avoidance including those who exercise control or influence over a company.

2.40 Doubling maximum sentences for tax fraud

As announced at Spring Budget 2023, the government will double the maximum sentences for the most egregious forms of tax fraud from 7 to 14 years.

2.41 Amendments to the Self Assessment tax return forms for cryptoassets

As announced at Spring Budget 2023, the government is introducing changes to the Self Assessment tax return forms SA108 (Capital gains summary page) and SA905 (Trust and estate capital gains page) requiring amounts in respect of cryptoassets to be separately identified. The changes will be introduced on the forms for tax year 2024 to 2025.

Table 1: Measures in this document without a corresponding announcement in the Budget report

Measure title Paragraph number
Income tax charge and rate 1.1
Pensions relief relating to net pay arrangements 1.4
Collective money purchase (CMP) winding up 1.5
Preventing Capital Gains Tax avoidance through share exchange 1.6
Capital Gains Tax: allowing relief on disposals of joint interests in land and private residences for Limited Liability Partnerships (LLPs) and Scottish partnerships 1.8
Capital Gains Tax: separation and divorce 1.9
Further tax provisions in connection with the Dormant Assets Scheme 1.11
Tax treatment of payments from the Welsh Government’s Jobs Growth Wales Plus scheme 1.13
Corporation tax rates 1.15
Multinational top-up tax and domestic top-up tax 1.16
Transfer pricing documentation 1.17
Corporation tax main rate amendment for Patent Box 1.18
Energy Profits Levy: decarbonisation investment allowance 1.21
Annual Investment Allowance 1.23
First-year allowance for electric vehicle charge-points 1.24
Expansion of the Seed Enterprise Investment Scheme 1.29
Reform of Company Share Option Plan (CSOP) 1.30
Double taxation relief: time limit for claims 1.35
Life insurance taxation: transfers and reinsurance of long-term business 1.36
Air Passenger Duty (APD): banding reforms and rates for 2023 to 2024 1.41
Amendments to entitlement to use rebated fuels 1.44
Aggregates Levy reform 1.45
Climate Change Levy (CCL): changes to rates from 1 April 2024 1.47
Plastic Packaging Tax amendment to penalties for late payment tax 1.49
Soft Drinks Industry Levy: concentrates mixed with sugar when dispensed 1.50
Insurance Premium Tax (IPT): power to make regulations by references to notices 1.53
Penalty reform for VAT: technical changes to late payment interest, late payment penalties, and repayment interest rules for VAT 1.56
New tax checks for licence renewal applications in Scotland and Northern Ireland 1.57
OECD Mandatory Disclosure Rules (MDR), technical amendment to primary legislation and Automatic Exchange of Information (AEOI) powers consolidation 1.59
Amendment to the Customs and Excise Act 1979 - control of movement of Aircraft into and out of the UK 1.61
Introduction of Customs Advance Valuation Rulings 1.62
Discretionary guarantees on delivery of imported goods 1.63
Trade remedies reform 1.64
Trade remedies reimbursement 1.65
Bilateral safeguarding measures 1.66
Homes for Ukraine: Property Tax exemptions and reliefs 1.67
Homes for Ukraine: income tax and corporation tax exemption 1.68
Taxation of Lump Sum Exit Scheme payment 1.69
Strengthening HMRC’s ability to implement Financial Sanctions 1.70
Creative tax reliefs reform – administrative changes 2.16
Landfill Community Fund Value 2023 2.28
Pensions tax administration – digitalising Relief at Source 2.5