Finance (No. 2) Bill 2016-17 was published on 20 March.
On 20 March, the Government published Finance (No. 2) Bill 2016-17 (Finance Bill 2017). The Bill, the first of two Finance Bills expected to be published this year, is the longest ever Finance Bill published - 762 pages long and, as has been widely reported in the press, weighing as much as a baby gorilla – which may surprise some considering the relative quietness of the Spring Budget. However, many of the measures in the Bill were announced under the Chancellor’s predecessor George Osborne, and a number of the clauses had been published in December for consultation.
Our analysis of the key measures can be found on our dedicated webpage, and include:
From 1 April 2017 a new regime will restrict the tax deductibility of interest-like expenses for UK companies.
Two amendments have been made to the hybrid mismatch rules to improve the way these rules will work.
The conditions of the SSE have been relaxed significantly, in particular for companies owned by qualifying institutional investors.
New restriction on the use of carried forward losses. Most post-1 April 2017 losses will no longer need to be streamed and can be surrendered as group relief.
Patent Box implications for companies involved in collaborative research and development (R&D).
UK residential property owned through certain non-UK structures and lenders providing debt finance will be subject to IHT.
HMRC’s proposed solution to avoid double tax on carry in trusts distributed to a beneficiary may result in unexpected tax liabilities.
Policyholders will be able to apply to HMRC to recalculate gains on part surrenders where the normal rules would produce a wholly disproportionate gain.
Non doms - are you ready for the fundamental change in the compliance landscape that starts on 6 April 2017?
The Finance Bill contains significant changes to the taxation of termination payments which are due to come into effect from 6 April 2018.
The previously announced measures on off-payroll working in the public sector are proceeding as anticipated. The main material change appears to be the requirement that public authorities must take ‘reasonable care’ in relation to determining employment status i.e. treating all off-payroll workers as caught by the new rules will not meet the legislative criteria.
The Finance Bill has clarified some areas although more work is required in other areas. But our primary concern continues to be that many employers will still not appreciate that the proposed legislation is wider than salary sacrifice and also impacts any arrangements where the employee can choose between cash and a benefit (e.g. car). As such, many will continue to think that, as they do not offer traditional salary sacrifice, no further action is required by them.
There is a welcome change in that the Government has decided to consult further on the Close Company Gateway test which was intended to greatly increase the scope of the legislation. As such, the provisions in this regard that were contained in the draft Finance Bill have been removed. The other changes in this area however, and in particular the 2019 loan charge, are proceeding broadly as anticipated.
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