This supplement draws attention to new developments, principally statutory and case
law, since the publication of Tiley’s Revenue Law 10th ed in 2022.

Finance Act 2023 was just 12 sections long and made provision for an increased tax
rate, reduced additional investment expenditure, extended effective period for the
energy profits levy, some changes to the taxation of cars, and increased relief for
expenditure on research and development. Most importantly, especially during a
sustained period of high inflation and falling real wages, FA 2023 froze the basic rate
limit and personal allowance for income tax and rate bands for inheritance tax until
the end of tax year 2027-28. The Institute for Fiscal Studies has predicted 1 in 5 UK
taxpayers will be in the higher rate bracket or above by 2027-28. The increased tax
revenues from ‘fiscal drag’ will be significant and noticeable. Judith Freedman has
also quite rightly pointed out that the tax system is not designed to handle the
administration involved with that large a number of higher rate taxpayers. Further
changes that will result in higher personal taxes noted below include reducing the tax-free

dividend allowance and the annual exempt amount for capital gains tax.

The headline domestic tax change in Finance (No 2) Act 2023 was to introduce
temporary full expensing for plant and machinery along with making the temporary
increase in Annual Investment Allowance permanent. Also notable was the abolition
of the lifetime allowance charge for pensions. In addition, the Act provides the
legislative framework for the UK to introduce a multinational top-up tax and domestic
top-up tax to implement the OECD’s Inclusive Framework Pillar 2 proposals in 2024.
For commentary on the changes introduced by the Finance Act 2023 and Finance (No
2) Act 2023, readers are directed to issue 4 of the 2023 British Tax Review.

In his remarkable 23 September 2022 statement in the House of Commons, then
Chancellor Kwasi Kwarteng announced a series of unfunded tax cuts, which were
quickly reversed by the new Chancellor Jeremey Hunt after Rishi Sunak replaced Liz
Truss as Prime Minister. One of the few announcements that day that was not
reversed was the abolition of the Office of Tax Simplification. This author hopes that
a future government will rethink this decision as the OTS made substantial
contributions to the development, simplification, and understanding of UK tax law
and was extremely good value for money. OTS reports have been a fixture of this
author’s reading lists for many years and the lack of new ones represents a real loss to
the profession, academics and students. Readers are also directed to a current note by
Adrian Sawyer on the OTS’s abolition in issue 2 of the 2023 British Tax Review.

Finance Act 2024 was mercifully short and most notable for making the temporary
full expensing for plant and machinery permanent and introducing a new regime for
research and development carried out by companies. In addition, from 2024-25
onwards, the cash basis will be the default method for calculating business profits for
self-employed traders and those in partnerships.

At the Spring Budget 2024, the Chancellor’s main tax announcements were further
reductions in National Insurance rates, abolishing the ‘non dom rules’ and replacing
them with a temporary residence-based regime under which individuals will not pay
tax in respect of foreign income and gains arising in their first 4 years of UK tax
residence, abolishing the furnished holiday letting (FHL) regime, and reducing the
higher rate of CGT on residential property to 24%. Notably both the non doms
changes and the FHL regime changes were not included at bill stage and did not make
it into the Finance (No 2) Act 2024, which was rushed through Parliament after the
Prime Minister announced an election for 4 July 2024. We await with great interest to
see what changes, if any, will be made to FHL and the non-dom regime, and more
generally what additional tax changes (i.e. rises!) will be introduced by the new
government.

For commentary on the changes introduced by the Finance Act 2024 and the Finance
(No 2) Act 2024, readers are directed to issue 4 of the 2024 British Tax Review
(available on Westlaw).

Glen Loutzenhiser, June 2024