Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Controversial California Billionaire Tax Proposal Declared Eligible for the November Ballot
A controversial California ballot proposal targeting billionaires has been declared eligible for the November election. The measure would impose additional taxes on ultra-high-net-worth individuals in California, making it one of the most aggressive state-level wealth tax proposals in the US. The initiative has sparked significant debate among policymakers, business groups, and tax advocates. If passed by voters, it could mark a landmark shift in California's personal income tax landscape and potentially influence similar proposals in other states, though critics warn it could drive wealthy residents to relocate.
Guidance: Tax and National Insurance contributions for MPs and ministers
This UK government guidance explains the tax and National Insurance contributions (NICs) treatment applicable to Members of Parliament and government ministers. It covers how their pay, allowances, and expenses are taxed, including what counts as taxable income and what may be exempt. Given that MPs and ministers have unique employment arrangements — including dual roles and parliamentary expenses — the guidance clarifies HMRC's position on their specific obligations under personal income tax and payroll/NIC rules, helping both officeholders and parliamentary administrators ensure correct tax treatment and compliance.
MDDP Webinar: B2B Reclassification into Employment: Dispute, Penalties and Tax Impact (VAT & Personal) (July 15)
MDDP is hosting a webinar on 15 July covering the tax implications of reclassifying B2B contractor relationships as employment. The session addresses disputes arising from such reclassifications, associated penalties, and the dual tax impact spanning both VAT and personal income tax. As tax authorities increasingly scrutinise disguised employment arrangements, businesses and contractors face significant exposure. The webinar aims to help participants understand compliance risks, dispute resolution options, and how reclassification affects input VAT recovery rights and personal income tax obligations for affected individuals and engaging businesses.
Guidance: Self Assessment payment plan: service availability and issues
This UK government guidance addresses the availability and known issues with HMRC's Self Assessment payment plan service (Time to Pay), which allows taxpayers to spread personal tax liabilities over instalments. While it is primarily a service status update rather than a policy or legislative article, it has a direct tax angle as it affects taxpayers' ability to manage and settle personal income tax obligations through HMRC's digital infrastructure. The guidance is relevant to individuals relying on this facility to meet Self Assessment deadlines and avoid penalties.
Guidance: Agent update: issue 144
HMRC's Agent Update Issue 144 provides guidance for tax agents and advisers in the UK, covering updates across multiple tax areas including compliance, PAYE, VAT, self-assessment, and other HMRC administrative matters. These periodic updates serve as a key communication channel between HMRC and tax professionals, outlining procedural changes, deadline reminders, and policy developments. The publication is relevant to agents managing client tax affairs across income tax, VAT, and payroll obligations, making it a broad but genuine tax resource for practitioners operating within the UK tax system.
Guidance: Simple Assessment payment plan: service availability and issues
HMRC's guidance on the Simple Assessment payment plan covers service availability and known issues for taxpayers using this facility. Simple Assessment is used by HMRC to collect income tax without requiring a full self-assessment return, typically for individuals with straightforward tax liabilities such as pensioners or employees with underpaid tax. The payment plan allows taxpayers to spread their liability over time. This guidance is directly relevant to personal income tax administration in the UK, helping taxpayers and agents navigate system availability and technical issues when setting up instalment arrangements.
Tax Credits Manual
The HMRC Tax Credits Manual is an internal guidance document used by HMRC staff to administer the UK's tax credits system, covering Working Tax Credit and Child Tax Credit. It provides detailed procedural and legislative guidance on eligibility, claims, renewals, overpayments, and compliance. While tax credits are technically distinct from income tax, they are administered by HMRC and directly interact with personal income tax and payroll systems. The manual is a key reference for understanding how low-income working households are supported through the UK tax and benefits framework.
FBR reveals 9,000 Pakistanis hold Rs750b in bank deposits but pay no income tax
Pakistan's Federal Board of Revenue (FBR) has disclosed that approximately 9,000 Pakistani individuals hold bank deposits totalling Rs750 billion yet pay no income tax, highlighting a significant gap in tax compliance and enforcement. This revelation underscores persistent challenges in broadening the personal income tax base in Pakistan. The FBR's data points to wealthy non-filers evading tax obligations despite substantial financial assets. Authorities are expected to use this information to pursue enforcement actions and bring high-net-worth non-compliant individuals into the tax net, as Pakistan seeks to improve its tax-to-GDP ratio under IMF program commitments.
OECD: Consultation launched on digital platform reporting rules
The OECD has launched a consultation on digital platform reporting rules, targeting the growing gig and sharing economy. These rules require digital platforms to collect and report seller data to tax authorities, enabling cross-border information exchange to ensure income earned through platforms is properly taxed. The consultation seeks stakeholder input on implementation details, compliance burdens, and international coordination. This initiative builds on the OECD's Model Rules for Reporting by Platform Operators, which many jurisdictions are already adopting into domestic legislation, with significant implications for VAT/GST compliance and personal income tax reporting across member and non-member countries.
Treasury Department Says Expect Guidance Soon on New Scholarship Tax Credit
The U.S. Treasury Department has announced that guidance is forthcoming on a new scholarship tax credit, likely introduced as part of recent tax legislation. The credit is expected to provide tax relief related to educational scholarships, and Treasury's upcoming guidance will clarify eligibility requirements, calculation methods, and compliance obligations for taxpayers and institutions. The announcement signals regulatory activity around the new provision, with practitioners and affected parties awaiting formal rules to implement the credit correctly in tax filings and planning strategies.
Michigan Treasury Officials Grilled About Tax Error Affecting 27,000 Filers
Michigan Treasury officials faced legislative scrutiny over a tax processing error that affected approximately 27,000 tax filers in the state. Lawmakers questioned treasury representatives about the nature of the mistake, its causes, and the steps being taken to rectify the situation for impacted taxpayers. The incident raises concerns about administrative accuracy and oversight within Michigan's state tax system, potentially affecting refunds, assessments, or filings for thousands of residents. The grilling reflects broader accountability demands from legislators seeking transparency on how such errors occur and what safeguards will be implemented to prevent recurrence.
Policy paper: Increase to Approved Mileage Allowance Payments (AMAPs) and self employed simplified mileage rates
UK policy paper announcing an increase to Approved Mileage Allowance Payments (AMAPs) and self-employed simplified mileage rates. AMAPs allow employees to be reimbursed tax-free for business travel in their own vehicles. The increase adjusts the approved rates per mile to better reflect current fuel and vehicle running costs. Self-employed individuals using simplified expenses for business mileage will also benefit from the revised rates. The change has direct personal income tax and payroll tax implications for employers, employees, and self-employed taxpayers across the UK.
Early Review of Tax Affairs Essential for Compliance
An early review of tax affairs is highlighted as essential for compliance in South Africa, with the South African Institute of Tax Professionals (SAIT) emphasizing proactive engagement with tax obligations. The article underscores the importance of taxpayers reviewing their financial and tax positions ahead of deadlines to avoid penalties and interest from SARS. Timely compliance reduces audit risk and ensures accurate reporting. The guidance is particularly relevant for individuals and businesses navigating complex tax rules, encouraging them to work with qualified tax practitioners to identify exposures and rectify discrepancies before SARS intervenes.
She cleans your house but the tax system can’t see her
This article examines how informal and domestic workers — such as house cleaners — remain largely invisible to tax systems, particularly in economies where cash-in-hand arrangements are common. It explores the structural failures of tax policy in capturing informal labor income, the implications for tax equity and revenue collection, and the disproportionate burden placed on formal workers. The piece highlights how personal income tax systems are ill-equipped to address the shadow economy of domestic work, and calls for reforms to bring informal workers into the tax base while protecting their rights and economic vulnerability.
Trust Tax Compliance Under Increased SARS Scrutiny
SARS has intensified scrutiny of trust tax compliance in South Africa, signaling a crackdown on trusts used for tax planning or income splitting. The South African Institute of Tax Professionals (SAIT) notes that SARS is closely examining trust structures, beneficial ownership disclosures, and whether distributions are correctly taxed in the hands of beneficiaries. Trustees and tax practitioners are urged to ensure accurate reporting of trust income, capital gains, and loans. Non-compliance risks include penalties, interest, and potential reclassification of trust transactions. The increased focus reflects broader SARS efforts to close tax gaps through targeted enforcement.
Tax Deduction Claims Under Scrutiny as SARS Tightens Compliance
SARS is tightening compliance around tax deduction claims in South Africa, increasing scrutiny of expenses claimed by individuals and businesses. The South African Institute of Tax Professionals (SAIT) warns that deductions lacking proper substantiation, such as home office expenses, travel allowances, and business costs, are under heightened review. Taxpayers must ensure claims are supported by accurate records and meet legislative requirements. SARS is leveraging data matching and third-party information to identify discrepancies. Non-compliant deductions face disallowance, penalties, and interest. Practitioners are advised to guide clients on maintaining documentation and submitting defensible, accurate returns.
US Has Most Progressive Tax System in OECD, New Index Shows
A new index from the Tax Foundation reveals that the United States has the most progressive tax system among OECD nations. The index evaluates how tax burdens shift across income levels, measuring the degree to which higher earners pay disproportionately more than lower earners. The findings highlight the redistributive nature of the US tax code relative to peer nations, sparking discussion about fairness, competitiveness, and the structure of income taxation. The analysis draws on comparative data across OECD members, positioning the US at the top of the progressivity ranking and reigniting debates about tax policy design and income inequality.
District Court Refuses to Shake Up SALT Cap
A U.S. district court has declined to strike down the $10,000 state and local tax (SALT) deduction cap introduced by the 2017 Tax Cuts and Jobs Act. The court rejected the legal challenge, upholding the federal limitation on SALT deductions that has been controversial particularly for taxpayers in high-tax states such as New York, New Jersey, and California. The ruling maintains the status quo for millions of individual filers who have faced higher federal tax bills since the cap was enacted. The decision represents another failed attempt to overturn the cap through litigation rather than congressional action.
Bask in Tax Breaks for Vacation Home Rentals
An overview of U.S. tax breaks available to owners who rent out vacation homes. Key rules govern the split between personal and rental use, with the 14-day or 10%-of-rental-days threshold determining whether a property is treated as a residence or a rental. Owners who qualify can deduct mortgage interest, property taxes, depreciation, and operating expenses against rental income. The article explains IRS allocation methods for mixed-use properties, passive activity loss limitations, and the potential to exclude short-term rental income when personal use stays below the threshold, helping taxpayers maximize legitimate deductions.
Maximizing Roth Conversions Through Strategic Timing and Residency Planning
This article explores strategies for maximizing Roth IRA conversions by carefully timing conversions during low-income years and leveraging state residency planning to minimize tax liability. It examines how individuals can reduce federal and state income tax burdens by converting traditional IRA funds to Roth accounts when in lower tax brackets, potentially relocating to no-income-tax states before executing large conversions. The piece highlights the long-term tax-free growth benefits of Roth accounts and addresses key considerations around Medicare surcharges, Social Security taxation, and the importance of coordinating conversion timing with broader retirement and estate planning goals.
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