A summary of key legal updates for the Private Client sector over the past week is as follows.
Tax Administration and Maintenance Day
On 18 November, the government announced a "Tax Administration and Maintenance day" for 30 November 2021 on which there will be published consultations for announcements made at Autumn Budget 2021, summaries of responses to recently closed consultations, technical information notices and updates on ongoing policy initiatives to modernise and improve the tax system. It remains to be seen whether there will be any update from the government on the reforms to capital gains tax ("CGT") and inheritance tax ("IHT") proposed by the Office of Tax Simplification in their reports in November 2018 (IHT), July 2019 (IHT), November 2020 (CGT) and March 2021 (CGT). Tax Administration and Maintenance Day set for 30 November 2021 - GOV.UK (www.gov.uk)
On 16 November, the Financial Secretary to the Treasury gave a written answer to a House of Commons question on the possible introduction of a UK wealth tax. This suggests that the government has no immediate plans to introduce either a one-off or annual wealth tax to help the government's finances post-pandemic. In December 2020, the Wealth Tax Commission published its report recommending the introduction of such a tax, but arguably the best chance of securing public buy-in for the tax has now passed, with the peak of the pandemic over. Minister's written answer confirms lack of government appetite for a wealth tax | Practical Law (thomsonreuters.com)
Figures from HMRC show that IHT receipts for April 2021 to October 2021 are £3.6 billion, £600 million higher than the same period last year. The higher volumes of deaths during the Covid-19 pandemic are expected to be the main reason, although HMRC has not verified this. The freeze on the nil-rate band (£325,000 since 2009) will also be a factor. These statistics may indicate to the government that their "fiscal drag" policy is bringing in receipts without the need for them to introduce wider ranging IHT reforms. EPrivateClient - article (paminsight.com)
Mental capacity – small payments scheme
On 16 November, the Ministry of Justice launched a public consultation on allowing third-parties access to small funds belonging to family members who lack mental capacity, without the need for that third party to have the authority of a Lasting Power of Attorney or an order from the Court of Protection. The proposed scheme would allow payments up to £2,500 from cash-based accounts, such as a child trust fund ("CTF") or a Junior ISA. One of the objectives of the scheme is reportedly to help young adults who have a CTF or Junior ISA but who cannot access the funds due to lack of mental capacity. The first children with CTFs started to turn eighteen in September 2020. The scheme would be intended as an interim measure while longer-term arrangements are made (for example, a deputyship). The consultation closes on 12 January 2022. Access to child trust funds may be granted without England and Wales CoP order | STEP
The latest edition of HMRC’s Agent Update reminds agents that they must file their clients' annual tax on enveloped dwellings ("ATED") returns for 2022/23 by 30 April 2022 and have until the 1 April 2022 to register for the online service. Agent Update: issue 90 - GOV.UK (www.gov.uk)