A summary of key legal updates for the Private Client sector over the past week is as follows.
On 7 September, Boris Johnson announced tax rises to help support the NHS following the pandemic and to pay for long-awaited social care reform. The tax rises, to be introduced from April 2022, are:
- a 1.25% increase to National Insurance ("NI") for employees and employers (a 2.5% overall increase in the tax rate on earnings); and
- a 1.25% increase to dividend tax rates.
The new dividend tax rates will be 8.75% for basic rate taxpayers; 33.75% for higher rate taxpayers; and 39.35% for additional rate taxpayers. We assume that the dividend trust rate will also rise to 39.35%. As well as trustees, the dividend tax increase will affect wealthy investors and business-owners who pay themselves in dividends. MPs will vote on the tax rises today. EPrivateClient - article (paminsight.com)
On 7 September, HM Treasury announced that there will be an Autumn Budget on Wednesday 27 October 2021. There had been speculation that this would be delayed until Spring 2022. During a press conference following the announcement of the above tax rises, Boris Johnson refused to rule out further tax rises in this parliament, although he said he has an "emotional commitment" not to do so. Reforms to capital gains tax, and potentially a form of wealth tax, cannot therefore be ruled out; especially as the tax rises announced yesterday (forecast to raise £14bn p.a.) will help fund a new system of social care and will still leave high levels of government borrowing following the pandemic (£78bn at the end of July). Chancellor launches vision for future public spending - GOV.UK (www.gov.uk); Boris Johnson Refuses To Rule Out Further Tax Rises | HuffPost UK (huffingtonpost.co.uk);
Trust Register extension
HMRC has announced that the Trust Registration Service ("TRS") is now open for non-taxable trust registrations with effect from 1 September 2021. This will also be the date on which the TRS will open to requests from persons with a "legitimate interest" in a trust and to requests from the authorities of other countries. The deadlines for registrations are:
- non-taxable trusts in existence on or after 6 October 2020: by 1 September 2022;
- non-taxable trusts created after 1 September 2022: within 90 days of creation (amended from 30 days); and
- changes to the trust details or circumstances: within 90 days of the change (amended from 30 days).
All UK express trusts are affected unless they are specifically excluded. Non-UK express trusts are affected if they have taxable UK source income or assets; acquire land or property in the UK; or they have at least one UK resident trustee and enter into a "business relationship" within the UK. It has recently been announced that trusts for children's bank accounts and trusts holding healthcare insurance policies will not have to register. Trust Registration Service: TRS open for non-taxable trust registrations from 1 September 2021 and registration deadline extended to 1 September 2022 | Practical Law (thomsonreuters.com); HMRC provides further updates on TRS deadlines and exemptions | STEP
Court fees increase
The government is going ahead with previously announced plans to raise most court fees in England and Wales by about 8%, in line with inflation, despite opposition from most respondents to the public consultation. The fees affected include those that apply to Court of Protection cases. The new fees and fee remission thresholds will apply from this autumn, once statutory instruments have been laid. Court and Tribunal Fees - The Government response to the consultation on ‘Increasing selected court fees and Help with Fees income thresholds by inflation’ (publishing.service.gov.uk)