United Kingdom: Tax provisions in “Summer finance bill”

United Kingdom: Tax provisions in “Summer finance bill”

With debates on the Summer budget completed, the “Summer finance bill” has started its progress through Parliament.

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The Summer finance bill (more properly Finance Bill 2015-16) has been published, and has had its “first reading” in Parliament. “Second reading” is scheduled for 21 July 2015, immediately before the summer recess, with a Committee of the Whole House likely to consider the bill on 8 September, shortly after the Commons’ return.

While there is no firm indication of when Royal Assent might be expected, it seems likely that the bill would pass through its various parliamentary stages without any undue delay. 

What tax provisions are included?

The bill includes both provisions held over from before the election—notably on loan relationships and derivative contracts and the new “direct recovery of debt” rules—and some new measures picking up on manifesto pledges and/or announced in the Summer budget. These include:

  • The “tax lock” provisions for VAT and income tax (although not NIC, which has its own bill, also making its way through Parliament)
  • Extension of the inheritance tax “nil” rate band for principal residences

Other announcements in the Summer budget, including the changes to dividend taxation, domicile and the introduction of a statutory framework for the Office of Tax Simplification, will be included in the 2016 Finance Bill.

Read a July 2015 report [PDF 580 KB] prepared by the KPMG member firm in the UK: Weekly Tax Matters (17 July 2015)

Today’s KPMG report looks at the following areas of the bill in greater detail:

  • Direct recovery of debts
  • Corporate rescue reliefs applying from Royal Assent
  • Rules on deemed releases of loan relationships
  • Loan relationships and derivative contracts targeted anti-avoidance rules (TAARs)
  • Banking companies 8% surcharge
  • Restricted tax relief for finance costs of certain residential landlords
  • Carried interest
  • Additional inheritance tax (IHT) band for residential property
  • Inheritance tax, trusts, and some anomalies
  • Review of deeds of variation for tax purposes
  • Refocusing the venture capital schemes 

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