Overview

The Finance (No. 2) Bill aims to amend various aspects of UK tax law, primarily concerning income tax, corporation tax, capital gains tax, and other duties. It introduces a new Residential Property Developer Tax (RPDT) and an Economic Crime (Anti-Money Laundering) Levy, while also making changes to existing tax reliefs and allowances.

Description

This bill is extensive and covers numerous areas of tax law. Key aspects include:

Income Tax

• Sets income tax rates for 2022-23.
• Increases rates of tax on dividend income.
• Freezes the starting rate limit for savings.

Corporation Tax

• Reduces the banking surcharge rate.
• Introduces a new Residential Property Developer Tax (RPDT) on the profits of residential property developers, with a 4% rate and a £25,000,000 allowance.
• Makes changes to reliefs for film, theatre, orchestra, and museum exhibitions.
• Extends the temporary increase in annual investment allowance.
• Amends rules on capital allowances for structures and buildings.
• Introduces rules for qualifying asset holding companies (QAHCs) to facilitate investment.
• Amends rules regarding Real Estate Investment Trusts (REITs).
• Modifies rules relating to deductions for onerous or impaired leases.

Capital Gains Tax

• Extends the time limit for returns on disposals of UK land.

Other Taxes

• Amends rules concerning stamp duty and stamp duty reserve tax.
• Makes changes to VAT margin schemes, particularly for used cars in Northern Ireland.
• Amends rules related to insurance premium tax.
• Changes import duty rules concerning transitioned trade remedies.
• Restricts the use of rebated diesel and biofuels.
• Adjusts rates of tobacco products duty.
• Adjusts vehicle excise duty rates and extends the suspension of the HGV road user levy.
• Changes gaming duty rates.
• Amends rules about penalties for excise duty.
• Adjusts rates of landfill tax.
• Makes miscellaneous changes to plastic packaging tax.

Economic Crime Levy

• Introduces a new levy on regulated businesses with high UK revenue to fund anti-money laundering efforts.

Anti-Avoidance

• Gives HMRC greater powers to initiate winding-up petitions against tax avoidance promoters.
• Allows HMRC to publish information about tax avoidance schemes.
• Provides for penalties for facilitating avoidance schemes involving non-resident promoters.
• Introduces penalties for electronic sales suppression.
• Introduces measures for tobacco product tracing and security.

Other Provisions

• Increases the membership of the Office of Tax Simplification.
• Makes changes to discovery assessments and pension-related tax calculations.
• Provides temporary powers to modify taxation of employment income in case of disasters or emergencies.

Government Spending

The bill's impact on government spending is complex. The introduction of the RPDT and the Economic Crime Levy are expected to increase government revenue. However, the various tax reliefs and allowance changes could reduce revenue in some areas. Specific figures for the overall net effect are not readily available from the provided text.

Groups Affected

• High-income earners: Changes to dividend tax and the freezing of the savings allowance could impact this group.
• Banking sector: The reduction in the banking surcharge will affect this sector.
• Residential property developers: The introduction of the RPDT will directly impact this group.
• Creative industries (film, theatre, orchestras, museums): The bill makes changes to tax reliefs available to these sectors.
• Businesses investing in capital assets: The extension of the annual investment allowance is beneficial for this group.
• Insurance companies: Changes due to IFRS 17 accounting standards will affect this sector.
• Businesses using rebated diesel and biofuels: Restrictions on their use will be impactful.
• Tobacco companies: Changes to tobacco duty rates will directly affect this sector.
• Vehicle owners: Changes to vehicle excise duty rates will affect many.
• Gambling operators: Potential impact through the Economic Crime Levy.
• Landfill operators: Changes to landfill tax rates will directly affect this sector.
• Large businesses: Requirements for notification of uncertain tax treatments will affect this group.
• Tax avoidance facilitators: New penalties could affect this group.
• Public service pension scheme members: Changes to address unlawful discrimination.

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