Overview

This Finance Bill introduces various changes to UK tax laws, affecting income tax, corporation tax, capital gains tax, and other taxes. Key changes include adjustments to income tax rates, corporation tax rates, the loan charge, and the introduction of a digital services tax. The bill also makes amendments to several other tax areas, such as inheritance tax, stamp duty, and environmental taxes, and addresses various administrative and insolvency matters.

Description

The bill is extensive, covering numerous areas of taxation. Significant changes include:

• Income Tax: Sets main income tax rates for 2020-21 (20%, 40%, 45%), introduces tax relief for apprenticeship bursaries paid to care leavers, and modifies the tax treatment of some Scottish social security benefits. It also amends the tax treatment of benefits from cars, reducing the benefit based on CO2 emissions.
• Corporation Tax: Sets the main corporation tax rate for 2020 and 2021 at 19%, and introduces measures concerning capital losses, quarterly installment payments, and transactions with EEA residents.
• Loan Charge: Amends the loan charge, removing its application to loans made before December 9, 2010, and offering options to split the charge over three years, and offering relief in cases of disclosed but unenforceable liabilities.
• Digital Services Tax (DST): Introduces a new 2% tax on UK digital services revenues of large multinational companies exceeding specific thresholds. It sets out definitions for key terms and the process for reporting and payment of the tax and includes anti-avoidance provisions.
• Other Taxes: Includes adjustments to inheritance tax, stamp duty land tax, various excise duties (alcohol, tobacco, vehicle), environmental taxes (climate change levy, landfill tax), and import duty, reflecting policy changes and adjustments.
• Insolvency: Gives HMRC higher priority for certain debts in insolvency proceedings.
• Coronavirus Measures: Addresses the tax implications of various coronavirus support schemes.

Government Spending

The bill's impact on government spending is complex and multifaceted. The introduction of the digital services tax aims to increase revenue. However, other provisions, such as tax reliefs and deferrals, could potentially reduce government revenue in the short-term. Precise figures are not readily available from the provided text but will be revealed in the associated financial statements.

Groups Affected

• Individuals: Income tax rates and allowances, loan charge, inheritance tax, and potentially, the DST (as consumers).
• Companies: Corporation tax rates, capital gains tax, loan charge, digital services tax, and insolvency provisions.
• Care Leavers: May benefit from tax relief on apprenticeship bursaries.
• Multinational Tech Companies: Subject to the new digital services tax.
• Banking Companies: Affected by changes to the surcharge on banking companies.
• Property Businesses: Affected by changes to non-UK resident companies carrying on UK property businesses.
• Individuals and Businesses receiving Coronavirus Support: Tax implications of coronavirus support payments.
• Creditors: HMRC's higher priority in insolvency will affect creditor recoveries.

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