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Tax institute responds to Chancellor’s statement

The Chartered Institute of Taxation (CIOT) has commented on today’s government announcements of a Job Retention Bonus and temporary cut in Stamp Duty Land Tax.

Job Retention Bonus

John Barnett, chair of the CIOT’s Tax Policy and Oversight Committee, commented: “This looks like another big project for HMRC, keeping them at the heart of the Government’s economic response to coronavirus. We hope that HMRC can build on their expertise in creating the CJRS grant claim portal by adapting it to deliver the Job Retention bonus to employers next February too. They have been rightly praised for their speedy and effective delivery of the CJRS and SEISS schemes, but this has been at the cost of delays in other parts of HMRC’s work. We are concerned that, without extra resources, the delays now being suffered may continue into 2021.

“It appears that the bonus will be available for any employee who has been furloughed at any point, not just those still on furlough at the end of the CJRS. This is generous, but understandable, as otherwise it would provide an incentive to employers to keep people on furlough until the very end rather than bringing them back to work.

“Full details of this scheme will be needed ASAP, and by the end of August at the latest, to enable businesses to take decisions about staff retention at the end of CJRS in good time. The requirement to pay employees at least £520 per month on average may allow both some flexibility in bringing back employees part-time and encouraging employers to provide extra hours for lower earning employees.”

Temporary Stamp Duty Land Tax (SDLT) cut for residential property

The CIOT has highlighted a November 2011 report from HMRC which evaluated the introduction of a temporary SDLT relief for first-time buyers on transactions between March 2010 and 2012.  The evaluation concluded that the policy had little effect on improving the affordability of homes, with first-time house buyer transactions ‘around 0-2 per cent higher than they would have been in the absence of the relief’. It also suggested that ‘that the majority of the 1 per cent tax relief was capitalised in higher prices’.

However, it is notable that residential property prices have abated, in some areas more substantially than others, as a direct result of the COVID-19 lockdown measures and it is expected that it will take some months before the residential property market returns to normality. In the meantime, the Chancellor’s temporary SDLT reduction is likely to limit the reduction in prices which sellers of residential property are having to offer, and may result in an earlier kick-starting of the residential property market. As in March 2016, prior to the introduction of the higher rate for additional dwellings, there is likely to be a cliff-edge date – in this case 31 March 2021 - by which date buyers will have to complete their purchase to benefit from the temporary reduced rates.

Marc Selby, chair of the CIOT’s Property Taxes Committee, said: “This cut should help to revive the housing market, but the jury is out on whether it will mostly benefit buyers or sellers. In practice it may simply stabilise prices. It is important that the Government publish the economic analysis behind this policy, and commit to a thorough evaluation in due course to ensure that it meets its policy intent of reviving the residential property market in a cost-effective way."

Notes for editors

The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)

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