Overview

The Finance (No. 2) Bill 2024 makes various changes to UK tax laws, affecting income tax, capital gains tax (CGT), stamp duty land tax (SDLT), inheritance tax (IHT), corporation tax, and Value Added Tax (VAT). It also introduces measures related to financial services, energy levies, and tax avoidance.

Description

Key changes include:

• Income Tax: Maintains the current income tax rates for 2024-25 (20%, 40%, 45%). The starting rate limit for savings is frozen at £5,000. The high-income child benefit charge thresholds are increased to £60,000 and £80,000.
• Capital Gains Tax (CGT): Reduces the higher CGT rate for residential property gains to 24% from April 6th 2024.
• Stamp Duty Land Tax (SDLT): Abolishes multiple dwellings relief and introduces changes to first-time buyers' relief. Public bodies are no longer subject to the special 15% SDLT rate. These changes are effective from June 1st 2024 (with some exceptions).
• Inheritance Tax (IHT): Agricultural property and woodlands relief will only apply to property located in the UK. This is effective from April 6th 2024.
• Corporation Tax: Sets the main corporation tax rate at 25% for the 2025 financial year. The standard small profits rate is 19%, and the standard marginal relief fraction is 3/200ths.
• Creative Industries Tax Reliefs: Increases theatre, orchestra, and museums & galleries exhibition tax credits. A new additional relief is introduced for low-budget films with a specified UK connection.
• Energy Levy: Introduces an "energy security investment mechanism" that could end the energy profits levy early if oil and gas prices fall below a certain threshold.
• Financial Services: Allows the Treasury to extend tax provisions for authorized co-ownership schemes to certain other co-ownership schemes ("Reserved Investor Funds").
• Anti-Money Laundering Levy: Increases the threshold for the economic crime levy.
• Tax Avoidance: New provisions aim to prevent tax avoidance through asset transfers by closely-held companies.
• VAT: Introduces minor amendments to VAT refund procedures and provisions relating to terminal markets.
• Pension Schemes: Amends provisions concerning recognized transfers in collective money purchase arrangements.

Government Spending

The bill's impact on government spending is complex and depends on the revenue generated by the tax changes and the cost of the new reliefs and provisions. Specific figures are not provided in the bill text.

Groups Affected

• High-income earners: Affected by changes to income tax, CGT, and the high-income child benefit charge.
• Property buyers and sellers: Affected by changes to SDLT and CGT.
• Those transferring assets abroad: Affected by new measures to prevent tax avoidance.
• Businesses: Affected by changes to corporation tax and VAT.
• Creative industries: Benefiting from increased tax credits.
• Oil and gas companies: Affected by the energy profits levy and the potential for early termination.
• Financial institutions: Affected by changes to regulations for co-ownership schemes.
• Social Housing Providers: Changes to SDLT exemptions.

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