Overview

The Finance (No. 2) Bill is a comprehensive piece of UK legislation aiming to adjust various tax rates, introduce new taxes, and amend existing tax laws. It covers income tax, corporation tax, capital gains tax, excise duties, and other taxes, with a focus on anti-avoidance measures and increased tax revenue.

Description

This bill makes numerous changes across various taxes. Key changes include:

• Income Tax: Adjustments to personal allowances, basic rate limits, and tax rates for company cars and zero-emission vans. Introduction of new exemptions for certain expenses, abolition of the dispensation regime for benefits, and expansion of the benefits code. New rules on disguised investment management fees and increased remittance basis charge for long-term UK residents.
• Corporation Tax: A reduction in the main corporation tax rate to 20%. Changes related to loan relationships, intangible fixed assets acquired from related parties, research and development expenditure, film tax relief, and television tax relief. Introduction of restrictions on deductions for banking companies and tax avoidance measures concerning carried-forward losses.
• Capital Gains Tax: Amendments related to disposals of UK residential property by non-residents, high value disposals, private residence relief, wasting assets, and entrepreneurs' relief.
• Excise Duties: Adjustments to rates of duties on alcohol, tobacco, air passenger duty, vehicle excise duty, and gaming duty. New regulations regarding the wholesaling of controlled liquor, including licensing and penalty provisions.
• Other Taxes: Amendments to the aggregates levy (specifically a tax credit in Northern Ireland), climate change levy, landfill tax, stamp duty land tax, annual tax on enveloped dwellings, inheritance tax, and the bank levy. Introduction of a new diverted profits tax to target companies avoiding UK tax liabilities.
• Anti-Avoidance: Strengthened measures targeting tax avoidance schemes, accelerated payments, and offshore matters.

Government Spending

The bill's impact on government spending is complex and depends on the success of revenue-raising measures. The changes to tax rates and the introduction of new taxes are designed to increase government revenue, while some provisions like flood defence relief may increase government expenditure. Specific figures are not provided in the bill itself.

Groups Affected

• Individuals: Changes to income tax rates, allowances, and exemptions will affect individuals' tax liabilities. High net worth individuals may be impacted by the increased remittance basis charge.
• Companies: Corporation tax rate changes, new diverted profits tax, and anti-avoidance measures will impact corporate tax liabilities. Banking companies face specific restrictions on certain deductions.
• Charities: Some charities may benefit from VAT refund provisions.
• Non-residents: New capital gains tax rules for UK residential property disposals.
• Oil and Gas Companies: Changes to supplementary charges, investment allowances, and cluster area allowances significantly affect the industry's tax obligations.
• Alcohol and Tobacco Industries: Changes to excise duty rates will affect these sectors.
• Pensioners: New rules impacting pension annuities payable on death.
• Emergency services personnel: Inheritance tax exemptions for decorations and awards.

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