March 2024 / United Kingdom

Starting from March 2024, significant changes to the legislation on legal entities in the United Kingdom have come into effect under the "Economic Crime and Corporate Transparency Act" enacted on October 26, 2023.

These changes have been introduced with the primary aim of enhancing corporate transparency and improving data quality.

The main provisions of the law include:

• Registered Office: Companies are required to maintain an "appropriate address" as their registered office, where documents can be validly served, and acknowledgment of receipt can be recorded.
• Statement of Legal Purpose: Legal entities must confirm that the company's formation occurred for a legitimate purpose, both during the incorporation process and in subsequent annual statements to the UK Chamber of Commerce.
• Enhancement of Companies House Powers: The Companies House registry office is endowed with greater powers to challenge inaccurate or incomplete information, with the ability to remove them from public records. Additionally, stricter checks on company names will be implemented to avoid confusion or misleading impressions to the public.
• Sanctions: Penalties are provided for companies that fail to comply with registry requests or do not use an appropriate legal address.

Regarding "Confirmation Statements":

• Registered Email Address: Companies are required to provide an official email address to Companies House for official communications, keeping such address confidential.
• Statement of Legality of Activities: New companies must attest to the legality of their activities, while existing companies must do so in the next confirmation statement.

These reforms are aimed at promoting transparency and integrity in the context of business in the United Kingdom.

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2024. In doing so, it has accepted in full the recommendations of the Low Pay Commission.

The rates which will apply from 1 April 2024 are as follows:

UK's Chancellor of the Exchequer, Jeremy Hunt, presented his 2024 Spring Budget to the House of Commons on 6 March 2024 announcing a significant change in the taxation regime for non-domiciled individuals.

The Chancellor proposed that the present regime, whereby the overseas income and gains of non-domiciled individuals are not subject to UK tax for a period if they are not remitted to the United Kingdom, will be abolished. This will be replaced by a simpler system exempting such receipts for a 4-year period after an individual becomes resident in the UK. There will be transitional arrangements for a 2-year period.

The UK Chancellor of the Exchequer, Jeremy Hunt, delivered his Spring Budget speech to the House of Commons on 6th March 2024, unveiling a series of pivotal measures outlined below.

Business Taxes

• The primary rate of Class 1 National Insurance on employees' earnings will be reduced from 10% to 8% from 6 April 2024.
• The rate of Class 4 National Insurance on the earnings of self-employed individuals and partners will be reduced from 8% to 6% from 6 April 2024.
• Full expensing – the ability to deduct expenditure in full in the year in which it is incurred – will be extended to leased assets.
• The income threshold at which a business must register for value added tax (VAT) will increase from GBP 85,000 to GBP 90,000 from 1 April 2024.
• The furnished holiday letting regime will be abolished with the aim of improving the availability of property for long-term letting.
• Higher tax reliefs will apply to the cost of producing visual effects in high-end TV and film.
• Eligible film studios will receive a 40% relief on gross business rates until 2034.
• A new tax credit will apply to independent British films with a budget of less than GBP 15 million.
• The audiovisual expenditure credit for film, high-end TV and video games will be increased by 5% and the 80% cap for visual effects costs will be removed.
• The tax reliefs for theatres, orchestras, museums and galleries will be made permanent at rates of 45% for touring and 40% for non-touring productions.
• Air passenger duty will be increased on non-economy flights.
• The energy profits levy will be extended from March 2028 to March 2029 but could be abolished if market prices fall to historic levels sooner than expected.

Individual Income Tax

• The 28% higher rate of capital gains tax on real property will be reduced to 24%.
• The child benefit higher income charge – which currently applies to individuals – will be changed to a system based on household income from April 2026. From 2024, the income threshold will rise from GBP 50,000 to GBP 60,000. From that limit, the benefit will be gradually withdrawn at a rate of 1% for every GBP 200 of income up to an upper limit of GBP 80,000.
• A new individual savings account (ISA) – the "British ISA" – will allow investors to save up to GBP 5,000 a year into UK equities, with the usual ISA tax exemptions. This will be in addition to the existing GBP 20,000 limit for existing ISAs.

Other Taxes

• Fuel duty remains at its present level for another 12 months.
• Alcohol duties remain frozen until February 2025.
• Excise duty will be levied on vaping products from October 2026.
• Tobacco duty will be increased.
• The multiple dwellings relief for stamp duty land tax will be abolished.

Budget 2024 documents are available here.

Source: IBFD tax research platform news