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Budget 2020
Payments on account and 30 day returns Legislation has been enacted to change reporting obligations for residential property gains chargeable on UK resident individuals, trustees and personal representatives. Also introduced is a requirement to make a payment on account of the associated CGT liability. For disposals made on or after 6 April 2020:
y y a tax return is required if there is a disposal of UK land on which a residential property gain accrues
y y CGT is required to be computed on the reported gain in the tax return.
The return needs to be filed and the CGT paid within 30 days of the completion date of the property disposal.
The new requirements do not apply if a chargeable gain does not arise, for example where the gains are covered by PRR.
Inheritance tax (IHT) nil rate bands The nil rate band has remained at £325,000 since April 2009 and is set to remain frozen at this amount until April 2021. An additional nil rate band, called the ‘residence nil rate band’ (RNRB), continues to be phased in. For deaths in 2019/20 it is £150,000 rising to £175,000 for deaths in 2020/21. Thereafter it will rise in line with CPI. Comment The RNRB was introduced in April 2017 to allow the family home to be passed more easily to direct descendants on death without incurring a charge to IHT. There are, however, a number of conditions that must be met in order to obtain the RNRB, which may involve redrafting an existing will. Stamp Duty Land Tax (SDLT) surcharge A SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland is to go ahead. The 2% surcharge is to take effect from 1 April 2021. Where contracts are exchanged before 11 March 2020 but complete or are substantially performed after 1 April 2021, transitional rules may apply.
Other Matters VAT E-publications
The government will introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, to make it clear that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts.
Tampon tax
From 1 January 2021 the government will apply a zero rate of VAT to women’s sanitary products.
Postponed accounting
From 1 January 2021 postponed accounting for VAT will apply to all imports of goods, including those from the EU.
Comment The postponed accounting for VAT aims to provide a boost to those VAT registered UK businesses which are integrated in international supply chains as they adapt to the UK’s new trading arrangements under Brexit.
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