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 like VAT and tobacco duty. It introduces several new reliefs, modifies existing schemes, and clarifies tax administration procedures.

Description

This bill makes numerous changes across various tax areas. Key changes include: extending foster care tax relief to other care types (shared lives care); clarifying tax treatment of payments to special guardians and those with residence orders; amending qualifying care relief rules relating to capital allowances; adjusting tax treatment for seafarers' earnings; modifying venture capital and enterprise management incentive schemes; introducing rules on settlor repayment of excess tax; altering income tax collection methods; amending company distribution and REIT (Real Estate Investment Trust) stock dividend rules; updating the treatment of financing costs and income for groups of companies; streamlining consortium claims for group relief; removing intellectual property conditions for SME R&D tax relief; improving film tax credit rules for handling losses; updating rules for insurance business transfer schemes; introducing capital gains tax private residence relief for adult placement carers; making changes to first-year allowances for zero-emission goods vehicles; and making various adjustments to VAT, tobacco duty, landfill tax, and excise duties. The bill also modifies the administration of tax, including interest and penalty rules for late or incomplete returns and payments. Finally, the bill addresses asbestos compensation settlement taxation and clarifies certain aspects of pension schemes.

Government Spending

The bill's impact on government spending is not explicitly quantified. However, the introduction of new tax reliefs and changes to existing schemes will likely reduce government revenue, while changes to penalties and administration might increase revenue. The net effect on government spending is unclear without detailed analysis of the projected revenue changes from all affected areas.

Groups Affected

• Foster carers and Shared Lives carers: May benefit from expanded tax relief.
• Special guardians and those with residence orders: May experience altered tax treatment on payments received.
• Seafarers: May experience changes to tax deductions on earnings.
• Venture capitalists and businesses: May be impacted by changes to venture capital schemes.
• Companies and company shareholders: Will see amendments to corporation tax rules, company distributions and related tax credits.
• REITs: Will face changes related to stock dividends.
• SMEs: May benefit from simplified R&D tax relief.
• Film production companies: May see changes to how film tax credits are handled.
• Insurance companies: Will see updates on business transfer schemes.
• Adult placement carers: May benefit from changes to capital gains tax rules.
• Businesses using zero-emission goods vehicles: May benefit from new first-year allowances.
• Businesses and individuals: Changes to VAT, excise duties and other taxes will affect many.
• Taxpayers in general: Changes to tax administration, penalties, and interest rates will have broader impact.
• Asbestos compensation scheme beneficiaries and related parties: Will see changes to tax implications of settlements.

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