Further to a review of remote gambling taxation it is planned that new legislation will be introduced from December 2014. Operators will pay tax on profits generated from UK customers, wherever the supplier is based.
Machine games duty
With effect from 1 February 2013 a new machine games duty (MGD) will replace the Amusement Machine Licence Duty and VAT. There will be two rates of MGD.
A 5% MGD charge will be applicable where the cost to play is 10p or less and the maximum cash prize is £8.
All other machines will be liable to MGD at 20%.
VAT: anomalies and loopholes
- Listed buildings VAT change
- With effect from 1 October 2012 approved alterations to listed buildings will become subject to VAT. They are currently zero rated. This will raise an additional £85 million from persons unable to recover VAT, notably charities and private individuals.
- Self storage
- With effect from 1 October 2012 supplies of self storage services will become subject to VAT.
- Hot takeaway food
- With effect from 1 October 2012 the scope of the food zero rate is being reduced. A new definition of hot food is being introduced that covers all food products delivered for consumption at above the ambient air temperature.
- Holiday caravans
- With effect from 1 October 2012 legislation will be introduced to ensure holiday caravans are taxed at the standard rate.
- Hairdressers chair rental
- From 1 October 2012 the rental of chairs to hairstylists will be excluded from the exemption that applies to supplies of land or space. From this point their supply will become clearly standard rated.
From 1 April 2012 the VAT registration limit will rise from £73,000 to £77,000. The deregistration limit will increase from £71,000 to £75,000. The threshold for registration and deregistration for acquisitions from other EU Member States will also be increased from £73,000 to £77,000.
Fuel scale charge rates will be adjusted in line with current fuel prices with effect from 1 May 2012.
Relief for European Research Infrastructure Consortia (ERICs)
In the autumn of 2012 new legislation will be introduced to provide VAT relief for European Research Infrastructure Consortia.
VAT: low value consignments
The relief that allowed low value goods such as CDs and DVDs to be imported into the mainland UK free of VAT from the Channel islands will be abolished on 1 April 2012. The recent judicial challenge to this change failed.
VAT: cost sharing
As previously announced a VAT exemption will apply to VAT exempt bodies that share services and engage in non-business activities (e.g. charities and universities). The exemption will be more limited in scope than was originally hoped. It will only apply to supplies made by separate legal entities to their owning ‘members’. The services must be directly attributable to a non business or exempt activities meaning that there will be few opportunities to use this for overheads. There will also be a 5% threshold of exempt/non business activity that will allow a member to receive services using the new rules. This will be introduced with the passing of the Finance Act 2012.
VAT: online registration
From 31 October 2012 all applications to register for VAT will have to be made online using HMRC’s website. The paper application form will be abolished from this date.
The VAT registration threshold for non-UK established businesses will be removed from 1 December 2012.
Reduced rate for energy saving materials in charitable buildings
The government is removing the reduced rate that applies to energy saving materials purchased by charities for non business use and for village halls. This is because EU VAT law did not allow it.
Adapted vehicles and boats
The government is introducing a voluntary scheme to encourage car and boat dealerships to report the supply of adapted motor vehicles and yachts to wheelchair users, so as to take advantage of the zero VAT rating of such supplies.
Amendments to fuel scale
The Government will consult on a new arrangement whereby changes to fuel scale charges are published using a public notice rather than a statutory instrument.
Simplified UK VAT invoicing rules will be introduced with effect from 1 January 2013. The new simplified rules will follow those changes made in the EU Invoicing Directive.
VAT reliefs currently available to those claiming certain benefits will be carried over to claimants of the new Universal Credit.
There will be a review of the education VAT exemption to ensure that commercial universities are treated fairly.
Non-EU freight transport
From the autumn 2012 the hitherto temporary arrangements will be formalised to clarify that supplies of freight transport and related services which take place outside the EU will not be liable for UK VAT, when performed for UK businesses and charities.
Small cable cars
The government is addressing the problem of small cable car operators having to charge VAT upon their receipts whereas travel in larger cable cars is currently zero rated. From 2013 small cable car travel (that is cable cars carrying fewer than 10 people) will be subject to VAT at 5%.
Rate of SDLT rate
The SDLT rate for residential property is increasing to 7% (from the current 5%) for transactions where the chargeable consideration is more than £2million. This will apply to transactions that become chargeable on or after 22 March 2012. Transitional relief will generally ensure that the old rates will continue to apply in respect of contracts entered into before 22 March 2012 but completed on or after that date.
Houses owned by companies
A 15% rate of SDLT will apply to transactions in residential properties where the chargeable consideration is more than £2million and the property is purchased by certain types of non-natural persons, including companies, collective investment schemes and partnerships including a corporate partner. This rate will take effect from 21 March 2012. Transitional rules will apply where the contract was completed and signed by all parties to the transaction on or before 21 March 2012.
Anti-avoidance legislation will be introduced in response to a disclosed and well-known SDLT avoidance scheme to make it clear that the grant or assignment of an option cannot satisfy the requirements of the sub-sales rules. This will apply to transactions with effect from 21 March 2012.
Disclosure of schemes
Currently SDLT avoidance schemes that were disclosed under the disclosure of tax avoidance schemes (DOTAS) rules prior to April 2010 are not allocated a scheme reference number (SRN). Legislation is introduced to enable HMRC to bring certain pre April 2010 schemes within the SRN remit.
Disadvantaged areas relief from SDLT, which provided relief from SDLT for wholly residential property where the consideration did not exceed £150,000, has been abolished. The general threshold of £125,000 for residential property will now apply in all areas.
Elimination of old reliefs
Following the Office of Tax Simplification (OTS) review, the following reliefs and exemptions relating to stamp duty on land transactions have been repealed:
• Visiting forces and allied headquarters.
• Shared ownership transactions.
• Transfers to registered social landlords.
• Land in disadvantaged areas.
• Lease granted by registered social landlords.
Stamp duty on land transactions has been replaced by Stamp Duty Land Tax (SDLT) and the above reliefs and exemptions have, where applicable, been replaced by SDLT provisions.
Informal consultation will take place through the SDLT working group to explore ways of simplifying the SDLT rules that apply to:
• Lease arrangements involving an abnormal rent increase
• Substantial performance of an agreement for lease
• Lease that continue after a fixed term
Any legislation will be included in Finance Bill 2013.
Elimination of old reliefs
Following the Office of Tax Simplification (OTS) review, the following provisions relating to stamp duty on transactions in shares have been repealed:
• Exemption from stamp duty in connection with nationalisation schemes.
• Treasury powers to exempt transactions from stamp duty of a fixed amount.
• Acquisition relief providing for a reduced rate of stamp duty where a company acquires all or part of an undertaking of another company.