Legislation expected in the draft 2016 Finance Bill

Draft material for the 2016 Finance Bill is expected to be published on 9 December 2015.

At the time of the July 2015 Budget the government indicated its intention to legislate on the following matters in the 2016 Finance Bill. In many of these cases a consultation exercise has been carried out over the intervening period.

There are other issues on which the government is consulting with a view to making changes (if at all) in the 2017 Finance Bill or a subsequent Bill.

Unusually, this year, the draft material for the 2016 Finance Bill will appear only shortly after the previous Finance Bill (which became the Finance (No 2) Act 2015) received Royal Assent, which took place on 18 November. This situation arises because the government introduced an additional Finance Bill in July following the General Election.

Personal tax
  • Personal savings allowance: £,1000 of interest tax free for basic-rate taxpayers, £500 for higher rate taxpayers, and nil for additional rate taxpayers, from 6 April 2016
  • Dividends: abolition of tax credit, £5,000 nil-rate allowance and increased tax rates, from 6 April 2016
  • Long-term UK-residents: deemed domiciled in the UK for income tax and capital gains tax, from 6 April 2017
  • Non-domiciled individuals born in the UK to UK-domiciled parents: deemed UK-domiciled for income tax and capital gains tax while resident in the UK, from 6 April 2017
  • Inheritance tax and non-domiciled individuals: deemed domicile status aligned with new income tax and CGT position, from 6 April 2017
  • Inheritance tax main residence nil-rate band: provisions to deal with downsizing, from 6 April 2017
Employee tax
  • Trivial employee benefits: exempt if costing less than £50, from 6 April 2016
  • Simplified expenses: regime amended to accommodate partnerships
  • Tax relief for travel and subsistence: restricted where employee engaged through employment intermediary, from 6 April 2016
  • Company car tax: changes to scale rates for 2019/20
Pensions
  • A secondary market for annuities: to be introduced from 2017
  • Lifetime allowance for pension contributions: reduced from £1.25 million to £1 million, from 6 April 2016
Business tax
  • Averaging of farmers’ profits: averaging period extended from two to five years, from 6 April 2016
  • Bad debt relief for peer-to-peer loans: allowed against other peer-to-peer income, from 6 April 2015
  • Withholding tax on peer-to-peer loans: changes to rules, from 6 April 2017
  • Wear and tear allowance for landlords: replaced by a deduction for the actual costs of replacing furnishings, from 6 April 2016
  • Orchestra tax relief: corporation tax relief at a rate of 25% of qualifying expenditure, from 1 April 2016
Administration
  • Serial avoiders: special reporting requirements, surcharges for resulting inaccuracies, restrictions on access to reliefs, naming of affected taxpayers, and extending the Promoters of Tax Avoidance Schemes (POTAS) regime
  • General anti-abuse rule (GAAR) penalty: strengthening of the GAAR and a penalty for taxpayers within its scope
  • Tackling the hidden economy: extension of HMRC’s powers to acquire data from online intermediaries and electronic payment providers
  • Office of Tax Simplification: to be established on a statutory basis as a permanent office of HM Treasury
Other
  • VAT refunds for shared services: to eligible public bodies in respect of specified services
  • Stamp duty land tax: changes to treatment of Property Authorised Investment Funds (PAIFs) and Co-ownership Authorised Contractual Schemes (CoACSs)
  • Acqua-methanol: a reduced rate of fuel duty to apply
  • Control of raw tobacco: a registration scheme for users of, and dealers in, raw tobacco

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