Overview

This Finance Bill introduces various changes to UK tax laws, affecting income tax, corporation tax, capital gains tax, excise duties, VAT, and other taxes. It also includes provisions relating to insurance companies, friendly societies, controlled foreign companies, and oil.

Description

The bill is extensive, covering numerous tax changes. Key aspects include:

• Income Tax: Changes to tax rates and bands for 2012-13 and subsequent years, including a new high-income child benefit charge. Adjustments to personal allowances based on birth year rather than age.
• Corporation Tax: Reduction in the main corporation tax rate, changes to small profits rates, and provisions addressing anti-avoidance tactics.
• Capital Gains Tax: Update to the annual exempt amount and amendments to rules on foreign currency bank accounts and collective investment schemes.
• Insurance Companies: Significant restructuring of the tax regime for insurance companies carrying on long-term business, including a new I-E basis for basic life assurance and general annuity business (BLAGAB).
• Friendly Societies: Extension of insurance company tax rules to friendly societies, with specific exemptions for certain business.
• Controlled Foreign Companies (CFCs): Introduction of a new charge on UK resident companies with interests in non-UK resident CFCs, with various exemptions and anti-avoidance provisions.
• Oil: Amendments to rules concerning transfers within oil company groups and the supplementary charge for ring-fence trades.
• Excise Duties: Changes to rates for tobacco products, alcoholic liquor, hydrocarbon oil, air passenger duty, and gambling duties.
• VAT: Amendments to categorisation of supplies and exemptions, including provisions regarding non-established taxable persons and supplies of services by public bodies.
• Other Taxes: Changes to landfill tax, climate change levy, inheritance tax, bank levy, and stamp duty land tax, including a new higher rate for certain transactions involving high-value residential properties.
• Anti-Avoidance: The bill includes several measures aimed at preventing tax avoidance schemes across various tax areas.

Government Spending

The bill's impact on government spending is complex and depends on the success of revenue-raising measures and the extent of tax avoidance. Specific figures are not readily available in the provided text. The changes in tax rates and bands, alongside new charges, are intended to increase government revenue, while some reliefs might reduce government expenditure. A net effect is difficult to determine without further analysis.

Groups Affected

• High-income earners: Potentially affected by the high-income child benefit charge and other tax rate changes.
• Businesses: Affected by changes in corporation tax rates, capital allowances, and anti-avoidance measures.
• Insurance companies and friendly societies: Significantly impacted by changes to their tax regimes.
• Oil companies: Affected by changes to the supplementary charge and decommissioning expenditure rules.
• Charities and other non-profit organizations: Potentially affected by changes to gift aid and other income tax reliefs.
• Tax agents: Subject to new rules and penalties related to dishonest conduct.
• Individuals with foreign income or assets: Affected by the increased remittance basis charge and other provisions.
• Property developers and high value property owners: Affected by stamp duty land tax changes.
• Consumers of specific goods and services: Impacted by changes in excise duties and VAT rates.

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