Friday 6 July 2018
Finance Bill 2018-19: Draft Legislation and Measures with Immediate Effect
Today is the first legislation day in the new single fiscal event timetable, with the release of draft finance Bill legislation moved forward to July. This move makes more time available to scrutinise draft tax legislation ahead of its introduction and commencement, and should provide businesses and individual taxpayers with greater certainty and stability. It forms part of the Government’s commitment to publishing the majority of tax legislation in draft before it is introduced to Parliament. The Government have consulted on a number of tax policies announced in the Autumn Budget 2017 and other events and are today publishing responses to these consultations alongside draft legislation to be included in Finance Bill 2018-19, which will be introduced to Parliament following the next Budget.
Policy decisions in response to consultation
In response to consultation, the Government have made a number of policy decisions, including relating to:
Following the call for evidence the Government will retain rent-a-room relief at its current level of £7,500 and will introduce a new shared occupancy test, which must be met in order for income to qualify. The test will require the taxpayer to be living in the residence, and physically present for at least some part of the letting period, ensuring the relief meets its original purpose. The Government have published draft legislation to this effect.
Amendments to Gaming Duty accounting periods
The Government have published draft legislation to maintain the current arrangements of six-month accounting periods for gaming duty, but to remove the requirement to make payments on account. Additionally, the Government are introducing provision to allow for losses to be carried forward and offset against duty liabilities in future accounting periods. This will make the tax fairer and simpler.
Late payment of tax penalties and interest
Following consultation, the Government have published draft legislation for a new late payment penalty system and proposals to align interest rules across taxes. This is in addition to previously announced reforms to late filing penalties. The new penalty system will support tax compliance in a fair, proportionate manner. The rates that will apply to late payment penalties will be decided as part of a package to be announced at a future fiscal event.
Draft legislation being published for technical tax changes
In addition, the Government are publishing a small number of technical tax changes that need to be made to ensure legislation works as intended. These include measures relating to:
Clarifying the effect of the Optional Remuneration Arrangements legislation in respect of taxable cars and vans
Modernising the exemption relating to premiums and contributions paid by employers for death in service and retirement benefits.
The Government have also published draft legislation to comply with EU tax directives that they are required to transpose before the end of the implementation period.
Legislation with immediate effect
The Government have published draft legislation for the following measures that will have immediate or retrospective effect:
Changes to the income tax treatment of emergency vehicles
The Government have published draft legislation with wholly relieving effect to extend the scope of the current income tax exemption for emergency vehicles to cover all commuting journeys and to make related provisions. This will be treated as having taken effect on 6 April 2017.
Workplace charging for all-electric and plug-in hybrid vehicles
As announced at Autumn Budget 2017, the draft legislation published today introducing an exemption to remove any tax liability for charging electric cars or plug-in hybrids at or near a workplace will be treated as having taken effect on 6 April 2018.
Amendments to Corporate Interest Restriction rules
The Government have published draft legislation to clarify the application of the Corporate Interest Restriction (CIR) legislation in a number of specific circumstances and ensure that the rules work as intended. Certain wholly relieving elements of the changes being made, such as to the amendment of the CIR rules to Real Estate Investment Trusts (REITs) to prevent REITS suffering a double restriction in certain cases, will be deemed to always have had effect. This change will ensure the CIR rules apply as originally intended.
Corporation tax relief for carried-forward losses
The Government have published draft legislation for exchequer protection purposes to put beyond doubt the amount of relief that may be claimed, and also ensure the regime applies to insurers within the basic life assurance and general annuity business as intended. The legislation will take effect from 6 July 2018 to prevent companies from claiming excessive relief.
For other consultations, including those relating to withholding tax on royalties, hidden economy conditionality, the intangible fixed assets regime and tax abuse and insolvency, the Government are continuing to consider the responses and will respond in due course.
Draft legislation is accompanied by a Tax Information and Impact Note (TUN), an Explanatory Note (EN) and, where applicable, a summary of responses to consultation document. All publications can be found on the gov.uk website. The Government’s tax consultation tracker has also been updated. The technical consultation on draft legislation will be open for eight weeks, closing on 31 August 2018.