On 21 July 2020, HMRC published draft legislation for the next Finance Bill (which will eventually become Finance Act 2021). The draft provisions, accompanied by explanatory notes and Tax Information and Impact Notes, cover the following:
Termination payments: introducing a new calculation of post-employment notice pay (PENP) for employees paid in equal monthly instalments whose post-employment notice period is not a whole number of months, and bringing PENP into the charge to UK tax for individuals who are non-resident in the year of termination of their UK employment. The provisions will apply to those individuals who both have their employment terminated and receive a termination payment on or after 6 April 2021.
Zero-emission vans: from 2021–22 the cash equivalent of the van benefit charge for zero-emission vans will be nil.
Collective defined contribution pension schemes: setting out the tax treatment of the new pension arrangements introduced by the Pension Schemes Act 2020.
Enterprise management incentives: an extension to the time-limited exception for EMI share options granted on or after 19 March 2020 to ensure participants do not suffer a disqualifying event as a result of taking unpaid leave, being furloughed or working reduced hours because of coronavirus. The change will initially apply from 19 March 2020 until 5 April 2021.
Corporate interest restriction: two technical changes—
(a) to clarify the way certain provisions in the corporate interest restriction rules apply in the context of a real estate investment trust, to take into account that UK property businesses of non-resident companies are within the charge to corporation tax rather than income tax (this will apply from 21 July 2020); and
(b) to ensure no penalties arise for the late filing of an interest restriction return if there is a reasonable excuse for the failure, bringing the administrative rules in line with those for corporation tax self-assessment (this will apply from 1 April 2017).
SDLT surcharge for non-residents: a 2% surcharge will apply on purchases of dwellings by non-residents, including certain UK-resident companies controlled by non-residents. It will apply to purchases in England and Northern Ireland with an effective date on or after 1 April 2021.
SDLT higher rate relief for housing co-operatives: a new relief from the 15% higher rate of SDLT will apply where the purchase of a residential property valued in excess of £500,000 is made by a company which is a housing co-operative that has no transferable share capital. The change is expected to apply for transactions completing on or after the date of the autumn 2020 Budget.
Annual tax on enveloped dwellings relief for housing co-operatives: relief will also be available from ATED where an interest valued in excess of £500,000 is held in UK residential property exclusively by non-publicly funded, non-social housing co-operatives which have no transferable share capital. The change is expected to apply retrospectively from 1 April 2020.
VAT – public body refunds: the public body refund scheme in VATA 1994 s 33 will be expanded to include Sianel Pedwar Cymru (S4C), to allow the channel to recover VAT relating to its non-business activities.
Anti-avoidance: a range of new measures will be introduced to strengthen existing rules around promoters and enablers of tax avoidance schemes.
Tax checks on licence applications: a new requirement for public authorities, making the granting of certain licences (eg taxi businesses) conditional on providing information to HMRC. In effect, HMRC will have to confirm that the applicant is correctly registered for tax.
HMRC information powers: a new financial institution notice will be introduced to require financial institutions to provide information to HMRC when requested about a specific taxpayer, without the need for Tribunal approval.
Consultation on the draft legislation will close on 15 September 2020.
The following consultations have also been launched:
Carbon emissions tax: on how the regime would operate, if introduced from 1 January 2021, and how it might be developed in the future (closing on 29 September 2020).
HMRC has published a summary of responses to the June/July 2020 consultation on the operation of insurance premium tax. The responses ‘illustrated a range of views and concerns, so do not clearly indicate specific changes which could be made to improve IPT’ and so further consultation on specific proposals will follow.
On 21 July 2020, HMRC published draft legislation for the next Finance Bill (which will eventually become Finance Act 2021). The draft provisions, accompanied by explanatory notes and Tax Information and Impact Notes, cover the following:
Termination payments: introducing a new calculation of post-employment notice pay (PENP) for employees paid in equal monthly instalments whose post-employment notice period is not a whole number of months, and bringing PENP into the charge to UK tax for individuals who are non-resident in the year of termination of their UK employment. The provisions will apply to those individuals who both have their employment terminated and receive a termination payment on or after 6 April 2021.
Zero-emission vans: from 2021–22 the cash equivalent of the van benefit charge for zero-emission vans will be nil.
Collective defined contribution pension schemes: setting out the tax treatment of the new pension arrangements introduced by the Pension Schemes Act 2020.
Enterprise management incentives: an extension to the time-limited exception for EMI share options granted on or after 19 March 2020 to ensure participants do not suffer a disqualifying event as a result of taking unpaid leave, being furloughed or working reduced hours because of coronavirus. The change will initially apply from 19 March 2020 until 5 April 2021.
Corporate interest restriction: two technical changes—
(a) to clarify the way certain provisions in the corporate interest restriction rules apply in the context of a real estate investment trust, to take into account that UK property businesses of non-resident companies are within the charge to corporation tax rather than income tax (this will apply from 21 July 2020); and
(b) to ensure no penalties arise for the late filing of an interest restriction return if there is a reasonable excuse for the failure, bringing the administrative rules in line with those for corporation tax self-assessment (this will apply from 1 April 2017).
SDLT surcharge for non-residents: a 2% surcharge will apply on purchases of dwellings by non-residents, including certain UK-resident companies controlled by non-residents. It will apply to purchases in England and Northern Ireland with an effective date on or after 1 April 2021.
SDLT higher rate relief for housing co-operatives: a new relief from the 15% higher rate of SDLT will apply where the purchase of a residential property valued in excess of £500,000 is made by a company which is a housing co-operative that has no transferable share capital. The change is expected to apply for transactions completing on or after the date of the autumn 2020 Budget.
Annual tax on enveloped dwellings relief for housing co-operatives: relief will also be available from ATED where an interest valued in excess of £500,000 is held in UK residential property exclusively by non-publicly funded, non-social housing co-operatives which have no transferable share capital. The change is expected to apply retrospectively from 1 April 2020.
VAT – public body refunds: the public body refund scheme in VATA 1994 s 33 will be expanded to include Sianel Pedwar Cymru (S4C), to allow the channel to recover VAT relating to its non-business activities.
Anti-avoidance: a range of new measures will be introduced to strengthen existing rules around promoters and enablers of tax avoidance schemes.
Tax checks on licence applications: a new requirement for public authorities, making the granting of certain licences (eg taxi businesses) conditional on providing information to HMRC. In effect, HMRC will have to confirm that the applicant is correctly registered for tax.
HMRC information powers: a new financial institution notice will be introduced to require financial institutions to provide information to HMRC when requested about a specific taxpayer, without the need for Tribunal approval.
Consultation on the draft legislation will close on 15 September 2020.
The following consultations have also been launched:
Carbon emissions tax: on how the regime would operate, if introduced from 1 January 2021, and how it might be developed in the future (closing on 29 September 2020).
HMRC has published a summary of responses to the June/July 2020 consultation on the operation of insurance premium tax. The responses ‘illustrated a range of views and concerns, so do not clearly indicate specific changes which could be made to improve IPT’ and so further consultation on specific proposals will follow.
