Overview

The UK Finance Bill makes numerous provisions relating to finance, primarily focused on tax adjustments, reliefs, and anti-avoidance measures. It introduces changes to income tax, corporation tax, stamp duty, excise duties, environmental taxes, and the administration of tax collection, impacting businesses, individuals, and government spending.

Description

The Bill significantly alters tax regulations across various sectors. Key changes include making full expensing of plant and machinery expenditure permanent for companies, introducing a new regime for company research and development (R&D), and reforming the tax treatment of companies in the creative industries (film, television, video games, theatre, orchestral concerts, and museum/gallery exhibitions). The lifetime allowance charge for pensions is abolished, and changes are made to the taxation of lump sums from pension schemes. Other provisions cover updates to excise duty rates (tobacco, vehicles, air passenger duty), environmental taxes (landfill, aggregates, plastic packaging), and strengthened penalties for tax evasion. The bill also enhances HMRC’s powers regarding tax avoidance schemes, introducing disqualification of directors involved in promoting them and creating new offenses related to non-compliance with stop notices. Additionally, the bill modifies the calculation of trade profits, allowing the cash basis of accounting as a default for many, simplifies PAYE regulations for certain payers/payees, and updates various statutory references.

Government Spending

The bill's impact on government spending is complex and difficult to quantify precisely without further analysis from HM Treasury. The introduction of various tax reliefs, particularly for businesses and the creative industries, is expected to decrease government revenue in the short-to-medium term. This is partially offset by increased excise duties and tougher penalties for tax evasion which may increase revenue. The overall net effect on government spending will depend on the take-up of tax reliefs and the success of anti-avoidance measures.

Groups Affected

• Businesses: The bill offers various tax reliefs (capital allowances, R&D, creative industries), potentially boosting investment and growth but also potentially reducing tax revenue for the government.
• Companies in the creative industries: These companies will see changes to their tax liabilities under a new, streamlined system; some may benefit from tax credits, while others might face higher taxes.
• Pensioners and those with pension schemes: The abolition of the lifetime allowance charge is a major benefit to many, though adjustments to the taxation of lump sums will need to be considered.
• High-income earners: Changes to pension taxation could impact this group's tax planning strategies.
• Tobacco, vehicle, and airline industries: These industries will be affected by changes in excise duty rates.
• Companies involved in landfill, aggregates, and plastic packaging: These companies will be impacted by changes in environmental taxes.
• Tax avoidance scheme promoters: Face increased penalties, including the possibility of director disqualification.
• Individuals using the cash basis for tax calculations: Will find changes to the eligibility criteria and restrictions.
• HMRC: Gains enhanced powers to tackle tax evasion and avoidance.

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