Midweek Tax News

Later today (26 March), the Chancellor will deliver her statement in the House of Commons in response to the Office of Budget Responsibility’s Spring forecast. Recent media coverage indicates that the Chancellor is unlikely to include any significant tax measures in her statement. However we could see some tax consultation responses or new consultations, and it is possible that some tax administration measures will be announced. A summary of any tax-related measures will be included in next week’s Midweek Tax News.

Finance Bill 2025 completed its final stages in the House of Lords on 19 March. The Bill received Royal Assent the following day and was enacted as Finance Act 2025.

The National Insurance Contributions (Secondary Class 1 Contributions) Bill – which contains the legislation to implement the employer NIC changes announced by the Government in Autumn Budget 2024 – returned to the Commons on 19 March, where all of the amendments proposed by the Lords were rejected. The Bill returned to the House of Lords on Monday, 24 March, and the Lords proposed alternative amendments, which were rejected by the House of Commons yesterday. The Bill will now return to the House of Lords. Both the House of Commons and the House of Lords would need to agree on the wording of the Bill for it to gain Royal Assent and become law at this time. The measures in the Bill are generally to have effect from 6 April 2025.

The Building Safety Act 2022 introduced powers to impose a building safety levy on certain new residential buildings in England, to raise revenue to be spent on building safety. Scotland is separately working on its own levy.

In January 2024, following a consultation on the design of the levy, the Conservative Government launched a technical consultation on matters such as calculation methodology, administration and further exemptions. The Government has now published its response to this second consultation.

As well as providing the Government’s responses to the technical matters covered by the second consultation, the document sets out an outline of the levy, confirming that the policy proposals outlined in the previous Government's response to the first consultation will be taken forward. The levy will be charged on new dwellings and purpose-built student accommodation in England which require a building control application. Certain residential buildings which provide important community facilities and certain types of communal accommodation will be exempt from the levy charge. These include affordable housing, non-social homes built by not-for-profit registered providers, NHS hospitals, care homes, supported housing, children’s homes, domestic abuse shelters, accommodation for armed services personnel, criminal justice accommodation, and developments of fewer than 10 units (as a protection for small and medium-sized sites and enterprises). Local authorities will act as the collecting authority for the levy, and the levy charge will depend on the floorspace (gross internal area) of the development, with rates per square metre being set per local authority area. There will be a discounted levy rate of 50% for developments built on previously developed land.

The levy will come into effect in Autumn 2026, with the levy regulations to be laid in Parliament later this year.

In HMRC's recent Agent Update communication, it confirms that it will shortly be writing directly to groups which it believes are within the scope of the UK Pillar Two legislation (multinational top-up tax and domestic top-up tax). The letters, which will be issued by email and by post during the week commencing 31 March, will be HMRC’s fourth direct update to relevant groups.

Companies claiming creative industries tax reliefs must complete an additional information form in support of their claims, before or on the same day as submitting their CT600 Tax Returns. In the latest edition of its Agent Update publication, HMRC has confirmed that it intends to launch an updated version of the additional information form on 1 April 2025. There will also be new boxes on the CT600 for claims to audio-visual expenditure credit (AVEC) or the video games expenditure credit (VGEC). The new tax return supplementary page for creative industries (CT600P), which had originally been scheduled to be launched in April 2025, has been postponed until April 2026.

Also in the latest Agent Update, HMRC has confirmed that changes to the company size thresholds in the Companies Act 2006 from April 2025 will also apply for the purposes of the off-payroll working rules (IR35). The turnover and balance sheet thresholds are increasing in the Companies Act, meaning more companies will be considered small (and therefore will fall outside the scope of IR35). The threshold changes will have no practical impact for IR35 until 6 April 2026, at the earliest, because a company’s size is determined by reference to previous years.

The Reserved Investor Fund is a UK-based unauthorised contractual scheme for co-ownership schemes which meet the qualifying conditions. The rules setting out qualifying conditions (the Co-ownership Contractual Schemes (Tax) Regulations 2025) were laid and came into force on 19 March 2025. These regulations also set out the circumstances in which operators of RIFs must make notifications to HMRC. An “entry notification” must be made by the operator of the scheme within 3 months from when the scheme begins to operate as a RIF, and a return of information is required within 6 months after the end of each accounting period. HMRC may also need to be notified if other events occur, such as breaches of qualifying conditions. HMRC has now published guidance on making these notifications, which includes pdf forms to download and complete.

On 20 March 2025, the UK and Peru signed the new double taxation convention. The convention will enter into force once both countries have completed their parliamentary procedures and exchanged diplomatic notes. This will be the first tax treaty between the two countries, and businesses with operations in Peru may wish to review the impact of the articles on residence, permanent establishments and the dividend, interest and royalty withholding tax rates.

On 18 March 2025, the EU published the regulations which lay out the rules for applying for the status of ‘authorised declarant’ for the purposes of the EU Carbon Border Adjustment Mechanism (CBAM). Importers subject to the CBAM regulations need to obtain ‘authorised declarant’ status as of 1 January 2026 and the application process may take up to 180 days. Given the theoretical processing time by the competent CBAM authorities, businesses within the scope of the rules should consider filing the applications in the first half of 2025 with a substantive application package that addresses all the application requirements to reduce the possibility of the application being withdrawn. Further details are available in our global tax alert.

As previously highlighted in Midweek Tax News, at the meeting of ECOFIN on 11 March, EU Finance Ministers reached political agreement on a further amendment of Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC9). DAC9 complements the EU Pillar Two Directive by streamlining filing obligations for multinational enterprise groups (MNEs). It enables MNEs to file only one top-up tax information return, at central level, for the entire group, as opposed to multiple filings being made by each constituent entity of the MNE group, at local level. Once DAC9 is formally adopted by the Council, Member States will, subject to exceptions in certain cases, have until 31 December 2025 to transpose the rules into national law with information being exchanged by 31 December 2026. Further details are available in our global tax alert.

The next in our series of EMEIA financial services international tax and transfer pricing webcasts, at 9:00 on 28 March, will focus on the operational challenges of implementing the Authorised OECD Approach for profit attribution to permanent establishments. During the webcast, our panel will also provide an overview of some of the latest transfer pricing developments and market trends in the Netherlands.

If you would like to join this webcast, please register here. If you are unable to join the event live, an on-demand replay will also be available.

We have included links to a selection of our tax alerts below. Additional articles are available in our global tax alert library.

Germany: The German Federal Central Tax Office has published an update to the fact sheet on the eligibility for an exemption or refund of withholding tax, applicable to dividends under the German anti-treaty shopping rule.

Poland: The Polish Minister of Finance has published a General Interpretation regarding the legal professional privilege (LPP) of promoters and service providers in the context of the Mandatory Disclosure Rules (MDR). According to the General Interpretation, tax advisors and patent attorneys, due to their right to represent clients in court, share LPP rights similar to lawyers, which affects their reporting obligations.

Brazil: The Brazilian Government has introduced draft legislation proposing a 10% tax on dividends distributed to non-resident shareholders. If enacted this year, this would take effect on 1 January 2026.

The latest edition of EY’s monthly global report which summarises the latest activity in the BEPS project, as well as country specific legislative and administrative activity, is now available.