Back in March I wrote about the Treasury Committee’s report entitled Tax after Coronavirus which considered, amongst other things, a reform of SDLT, a more comprehensive review and reform of the tax system and a one-off wealth tax.
The Government has now issued a response, which is interesting for what it does and does not say. Some highlights are as follows.
- The Government has rejected any reduction in SDLT, citing the fact that it raises significant revenue (in 2019/20 it raised £8.4bn with an additional £3.2bn from non-resident SDLT). This is a blow for homeowners and industry professionals alike, who had hoped that decreasing the cost of moving home might help ensure that people lived in homes that were right for them, rather than simply staying in their existing homes for as long as possible.
- The Government will not be publishing a long-term tax policy strategy, rejecting both the Committee’s and STEP’s recommendation, citing the risk that publishing a tax strategy might encourage taxpayers to take fore-stalling action. Implementing tax changes at little or no notice should ideally be the exception, rather than the rule. Tax policy, especially in the aftermath of Covid-19, should be considered in the round and public engagement and debate should be encouraged.
- There was no mention of a potential wealth tax (albeit such a tax was simply discussed by the Treasury Committee and did not feature in their recommendations).
Although the Government has rejected some of these recommendations, it’s still likely that there are substantial changes to the tax system ahead. The tax agreement reached by the G7 this week is likely to lead to the OECD introducing a global minimum corporate tax rate of 15%, and the world’s 100 largest companies may need to reallocate up to 20% of their profits to reflect where sales were made. On the domestic front, the Office for Tax Simplification released its second review of capital gains tax recently, and some of those reforms may also be implemented.