Overview

The Finance (No. 2) Bill is a UK government bill that makes changes to various aspects of the tax system for the tax year 2018-19 and beyond. These changes affect both direct taxes (like income tax and corporation tax) and indirect taxes (like VAT and stamp duty), as well as customs enforcement.

Description

The bill covers a wide range of tax-related matters. Key changes include:

• Income Tax and Corporation Tax: Sets the main rates of income tax for 2018-19 and corporation tax rates for 2019. Makes amendments to allowances, including changes to the transferable allowance after the death of a spouse or civil partner.
• Employment Income: Introduces measures to address disguised remuneration, where employment income is provided through third parties. Clarifies tax treatment for seafarers' earnings and armed forces' accommodation allowances. Updates tax rules on benefits-in-kind concerning diesel cars and termination payments for foreign service.
• Investments: Modifies rules regarding Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCT) reliefs, introducing a new "risk-to-capital" condition.
• Partnerships: Introduces provisions relating to the taxation of partnerships, including bare trusts and the notional trade and business of indirect partners. Clarifies rules about partnership returns and how shares of profit and loss are determined.
• Corporation Tax: Increases the research and development expenditure credit and makes changes to the rules on intangible fixed assets, transactions between related parties, and corporate interest restrictions.
• Chargeable Gains: Freezes the indexation allowance for gains chargeable to corporation tax from December 2017 and makes adjustments to rules regarding assets transferred to non-resident companies and depreciatory transactions within company groups.
• Capital Allowances: Amends rules regarding first-year tax credits.
• Double Taxation Relief: Introduces adjustments to reduce relief in cases where losses are relieved sideways. Changes rules for specifying double taxation arrangements by Order in Council.
• Indirect Taxes: Includes changes to Value Added Tax (VAT) regarding online marketplaces and VAT refunds to public authorities. Amends Stamp Duty Land Tax (SDLT), introducing higher rates for additional dwellings and relief for first-time buyers. Changes to Landfill Tax includes charging for disposals not made at landfill sites. Updates rates for Air Passenger Duty (APD) and Vehicle Excise Duty (VED).
• Customs Enforcement: Grants officers wider powers to enter premises and inspect goods, and to search vehicles or vessels.

Government Spending

The bill's impact on government spending is not explicitly stated in the provided text, but it's likely to involve both increased revenue (from tax changes) and potentially some increased costs related to enforcement.

Groups Affected

• Individuals: Changes to income tax rates, allowances, and rules relating to employment income, investments, and settlements will affect individuals. First-time homebuyers will see potential tax benefits.
• Businesses: Changes to corporation tax, capital allowances, rules for partnerships, and indirect taxes will affect businesses. Companies using online marketplaces will face updated VAT rules.
• Pension schemes: Amendments to Part 4 of the Finance Act 2004 will affect registered pension schemes.
• Banks: The bill amends the bank levy.
• Oil and Gas Companies: Changes to how tariff receipts are taxed affect these companies.
• Public Authorities: Updated rules for VAT refunds to public authorities will affect local authorities and other bodies.

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