Finance (No. 2) Bill 2016-17 will be published on 20 March 2017.
With the Budget barely a week old and the Government already making headlines for planning to raise National Insurance for the self-employed - followed by the subsequent scrapping of these plans - the impending publication of Finance (No.2) Bill 2016-17 may have gone unnoticed by some. Nevertheless, the Bill is on its way, and will contain the final legislation (subject to amendments as part of the Parliamentary process) on a number of key tax measures.
From an employment taxes perspective, Finance Bill 2017 will have well over 20 individual measures. These will include the changes to the taxation of salary sacrifice arrangements which will impact on most employers providing reward and flexible benefit programmes and which need urgent attention pre-April. Also in the Bill will be the changes to how IR35 is to operate for the public sector. These changes have had a lot of attention in the trade press and reports are that flexible labour may be withdrawing from the public sector as a result of the changes. As a result, and potentially as a result of the Chancellor’s recent U-turn on the NIC increase for the self-employed, we could very well see these rules extended to the private sector over the coming year or so. One to watch. And of course, Personal Service Companies (which are the target of IR35) are, along with self-employment and the gig economy, part of the bigger question around how we tax work in the UK and we are certainly expecting more developments in this area once the Taylor Review is published in the Summer.
Businesses will be waiting on details of the further changes to the draft legislation on the tax deductibility of corporate interest expenses, triggered by the OECD’s BEPS recommendations under Action 4. We are also expecting to see more information on the reform of corporation tax loss relief and revised substantial shareholdings exemption (SSE) legislation which will come into force from 1 April 2017.
For individuals, however, the Finance Bill is not expected to bring a great many changes – unless these individuals are impacted by the new deemed domicile regime for long-term UK residents and those born in the UK (including offshore trusts). These rule changes will go ahead from 6 April 2017, and there remains much uncertainty which we hope will be clarified when the Bill is published. We also expect to see the final legislation on the extension of IHT to all UK residential property, which may have unexpected consequences for offshore lenders.
After the Bill is published on the Parliament site, our teams will review the legislation and produce our commentary on the key measures. This commentary will be uploaded to our dedicated webpage throughout the week as it is released, so please check back for updates. We will also be featuring a round-up of our coverage in next week’s Tax Matters Digest.
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