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 new measures relating to financial services and aims to prevent tax avoidance.

Description

Key changes include:

• Income Tax: Maintains existing income tax rates for 2024-25 (20%, 40%, 45%) and freezes the savings starting rate limit at £5,000.
• High Income Child Benefit Charge: Increases the income thresholds at which the charge applies to £60,000 and £80,000.
• Capital Gains Tax (CGT): Reduces the higher CGT rate for residential property gains to 24%.
• Stamp Duty Land Tax (SDLT): Abolishes multiple dwellings relief, introduces changes to first-time buyer relief, and exempts purchases by registered providers of social housing from certain SDLT rates.
• Inheritance Tax (IHT): Restricts agricultural property and woodlands relief to UK properties.
• Corporation Tax: Sets the main rate for the financial year 2025 at 25% and specifies the small profits rate and fraction.
• Creative Industries Tax Reliefs: Introduces additional relief for low-budget films with a UK connection and increases tax credits for theatre, orchestras, and museums and galleries.
• Energy Profits Levy: Creates an "energy security investment mechanism" that could end the levy early if oil and gas prices fall below a specified average.
• Financial Services: Allows regulations to extend tax provisions for authorized co-ownership schemes to certain other schemes.
• Anti-Money Laundering Levy: Increases the threshold for the economic crime levy from £250,000 to £500,000.
• Tax Avoidance Measures: Introduces provisions to prevent tax avoidance through asset transfers by closely held companies.
• VAT: Makes minor amendments to VAT refund procedures and regulations on terminal markets.
• Pension Schemes: Amends provisions relating to collective money purchase arrangements.

Government Spending

The bill's impact on government spending is complex and depends on various factors, including economic conditions and taxpayer behavior. The changes to tax rates and reliefs could affect both revenue collected and government expenditure. Specific figures are not provided in the bill text.

Groups Affected

Groups potentially affected include:

• High-income earners: Changes to income tax and the high-income child benefit charge.
• Property owners: Changes to CGT and SDLT.
• First-time buyers: Changes to first-time buyer relief.
• Registered providers of social housing: Changes to SDLT exemptions.
• Companies: Changes to corporation tax.
• Creative industries: Changes to film and other tax credits.
• Oil and gas companies: The energy security investment mechanism.
• Financial services firms: Changes to regulations for collective investment schemes.
• Individuals transferring assets abroad: New tax avoidance measures.
• Businesses using VAT: Minor VAT amendments.
• Pension scheme members: Changes to collective money purchase arrangements.

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