Since Gordon Brown was Chancellor, accountants have become used to hefty Finance Bills, many running to 500+ pages, arriving at least once a year.
If MPs are getting a bit fed-up of sitting through yet another round of committee deliberations on tax matters, imagine what members of the accountancy profession feel like, at least MPs get paid for the time they spend (or don’t spend) scrutinising the draft tax legislation, members of the accounting bodies technical committees are largely volunteers.
The new draft Finance Bill, the result of the recent budget, is remarkably slim at 50 clauses and 12 schedules extending to only 190 pages. This is largely because it is fairly light on new anti-avoidance rules and the Chancellor has resisted the temptation to invent a new tax!
What’s in the Finance Bill?
The usual clauses to set the tax rates and allowances for 2018/19, although the corporation tax rate for the year beginning 1 April 2019 was already set at 19%. Other changes:
A welcome tweak to the marriage allowances is made to allow retrospective claims where one spouse or civil partner has died. This took effect from 29th November 2017.
The changes to Stamp Duty for first-time buyers and the easing of the rules for the 3% supplement on additional homes are included and have already taken effect in England. For Wales, any changes apply from 1st April 2018, but the Welsh and indeed the Scottish Government, have not yet announced if their versions will mirror England’s.
HMRC are to have new powers to enter premises and inspect goods, plus the powers to search vehicles or boats and will be able to use reasonable force to gain entry to a locked vehicle or vessel.
They will also be able to enter any business premises used to trade goods, at any reasonable time, and require the business owner or building occupier to provide assistance with that search, by say opening crates or unpacking goods and if they don’t, HMRC will have the power to do it anyway!
Under new anti-avoidance rules, there will be a charge on loans to employees and it comes into effect in 2019, and will impose Income Tax and NIC on individuals who have not the repaid their “contractor loans” by 5 April 2019 or settled their tax position with HMRC.
There also changes to catch payments which are made by a close company via a circular route through a third party, to benefit the owners/directors of the company and thus avoiding tax or NIC. Such payments will be treated as remuneration of the owner/director unless the payment can be shown to be part of a commercial transaction.
What’s not in the new Finance Bill?
You can search the Finance Bill in vain for any mention of digital tax reporting or Making Tax Digital. All the functioning parts of the MTD rules are to be contained in HMRC regulations, which will have far less scrutiny than the primary law; so it makes me wonder, what they’re trying to slip under the radar?
There’s also no mention of a number of recent key Conservative party policies, including changes to Class 4 NIC for the self-employed, raising the Inheritance Tax threshold and grabbing the value of a pensioner’s house over £100 k to pay for residential/nursing care.
If I were cynical, I might think that the omissions are more to do with not having a parliamentary majority rather than a change of heart by Theresa May and Philip Hammond. I have my opinion, no doubt you have yours.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.