Vape tax and new data protection regime in Government programme

In a speech light on tax-related measures, the King said the impact of Covid and the war in Ukraine have created “significant long-term challenges” for the UK, with the Government focused on “increasing economic growth and safeguarding the health and security of the British people for generations to come”. 

He said the Government will “continue to take action to bring down inflation, to ease the cost of living for families and help businesses fund new jobs and investment,” while also supporting the Bank of England to return inflation to target levels by taking “responsible decisions on spending and borrowing”.

Other policies mentioned included renewable energy, improved public transport in North England, improvements to education and the NHS, AI and tougher sentences for serious crimes.

Introducing the speech, Prime Minister Rishi Sunak praised the UK’s economic growth, the recovery from soaring inflation in the last year and the “sound foundations” for further growth in the future. He said: “We have the lowest corporation tax in the G7. We’re increasing investment in R&D to reach £20 billion a year. We have four of the top ten universities globally, with our leading science institutions attracting the world’s brightest talents. And our capital allowances regime – the most generous in the OECD – is equivalent to a tax cut worth £27 billion, helping businesses to re-invest profits, and create yet more jobs and growth.”

The Prime Minister added that the announcement of the removal of the lifetime allowance cap for senior NHS consultants in March has helped to “encourage experienced doctors to stay on in the NHS,” while the Government has also “backed pubs” by “taking advantage of our Brexit freedoms to simplify the tax system and reduce the price of a pint”.

The Tobacco and Vapes Bill will ensure that children born on or after 1 January 2009 will never be able to be legally sold cigarettes. It is estimated smoking costs the country £17 billion a year - £3 billion in NHS and care costs and £14 billion through lost productivity – compared to an income of £10 billion from taxes on tobacco products.

Action on vaping includes a consultation which will explore a new duty on vapes, similar to that imposed in other countries, while ensuring that there is a “significant differential” between duty on vapes and tobacco products. Enforcement agencies including HMRC will also be given £30 million in extra funding to tackle underage and illegal sales of tobacco and vapes.

The new Data Protection and Digital Information Bill will “encourage innovation in technologies such as machine learning” and the UK will benefit from a new data protection regime away from EU regulations (the GDPR). The Bill will reduce burdens on businesses over data collection, say the Government, allowing them “to protect personal data in more proportionate and practical ways”. The powers of the Information Commissioner’s Office (ICO) will be strengthened to allow it to tackle organisations that breach data rules.

The Offshore Petroleum Licensing Bill will strengthen the UK’s energy production, reducing reliance on “volatile” or “hostile” foreign markets and regimes. The Government says the UK has some of the highest tax rates on fossil fuel producers, who are expected to pay around £50 billion in tax over the next five years, and that the UK is “committed” to achieving net zero by 2050.

Presenting their Media Bill, the Government highlight other measures they are taking to support the media and creative industries, including through a range of tax reliefs. They note that this year’s Budget announced further extensions to tax reliefs for orchestras, museums and galleries and reforms to audiovisual tax reliefs. Local newspapers will also enjoy the extension of business rates relief for office space until 2025.

While it was not specifically mentioned in the speech, we expect a Finance Bill after the Autumn Statement, including measures such as:

• Merging RDEC and SME R&D reliefs into a single, simplified above-the-line tax credit, plus a new permanent rate of relief for the most R&D intensive loss-making SMEs. (CIOT has commented on this here and ATT here.)
• Pensions lifetime allowance abolition
• Doubling maximum sentences for tax fraud
• Legislation to improve the quality of data collected by HMRC

Accounting bodies have expressed disappointment at the absence of legislation on audit reform from the Government’s programme.

Further reading: King’s Speech Background Notes.