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Finance Bill 2017 Draft Clauses

Finance Bill 2017 Draft Clauses

As an advance Christmas present for tax advisors and their clients, the Government has published the Draft Finance Bill 2017 clauses for consultation.

Michelle Quest

Head of Tax and Legal Services

KPMG in the UK


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Finance Bill

The Government has published the draft clauses for its forthcoming Finance Bill 2017 for consultation. We have provided our in depth analysis of the draft below. 


Draft Finance Bill 2017 - an overview

An overview of the key issues in the draft Finance Bill 2017 clauses for businesses, employers and individuals.


Reform of Loss Relief

Profits above £5m subject to 50% restriction in offset of brought-forward losses from April 2017. Streaming abolished for post-2017 losses.

Corporate Interest Restriction

Draft Finance Bill 2017 provides some welcomed (but not full) clarity in relation to the new UK interest deductibility rules.

Hybrids and other mismatches

Two amendments have been made to the hybrid mismatch rules to improve the way these rules will work.

Patent Box – Cost Sharing Arrangements

Patent Box implications for companies involved in collaborative research and development (R&D).

Reform of the substantial shareholding exemption (SSE)

The conditions of the SSE have been relaxed significantly, in particular for companies owned by qualifying institutional investors.

Other measures

A round up of some other draft clauses that may be of interest. 

Measures most relevant for infrastructure

UK Government published draft legislation on 5 December 2016 in respect of three important areas that directly affect UK infrastructure investments. 

Patent Box – Cost Sharing Arrangements

Patent Box – Cost Sharing Arrangements


Business Investment Relief Reforms

Business Investment Relief will be reformed from 6 April 2017 to make it more attractive to non-UK domiciled investors.  

Inheritance Tax on UK residential property

UK residential property will be subject to inheritance tax regardless of ownership structure and residence/domicile status of ultimate owner. 

Reliefs under new domicile tax rules

Transitional arrangements will be introduced on 6 April 2017 to help long-term remittance-basis taxpayers to adjust to paying tax on the arising basis thereafter.

I am a non-dom - how am I affected?

Non-doms, resident in the UK for 15 out of 20 years, will be deemed domiciled for all UK taxes, along with ‘returners’ with a UK domicile of origin.

Taxation of non-UK trusts under the new deemed domiciled regime

The income and capital gains tax treatment of settlors of non-UK trusts under the new deemed domiciled regime.

Life insurance policies: part surrenders and part assignments

Policyholders will be able to apply to HMRC for the gain arising to be calculated on a just and reasonable basis. 

‘Requirement to Correct’; offshore tax evasion and non-compliance

A new ‘Requirement to Correct’ (RTC) historic offshore tax evasion and non-compliance with much tougher new penalties for those who do not comply.


Salary Sacrifice Arrangements 

The income tax and NIC treatment of benefits in kind (BiKs) provided as part of a salary sacrifice arrangement is to be modified from 6 April 2017. There will be limited exceptions and existing arrangements will be “grandfathered” until 5 April 2018 (or 5 April 2021 in certain cases).

Dates for 'making good' taxable benefits-in-kind

The dates for ‘making good’ non-payroll benefits-in-kind (BiKs) are to be aligned to 6 July following the end of the tax year in which the tax charge arises.

Simplifying PAYE settlement agreements

The Government is simplifying the administration of PAYE Settlement Agreements by removing the need to agree them up front and providing further guidance on what can be included.

Off-payroll working in the public sector: reform of the intermediaries legislation (IR35)

The draft Finance Bill 2017 sets out the proposed new rules that will apply to public sector bodies hiring off-payroll workers via personal service intermediaries. 

Changes to disguised remuneration legislation

HMRC have announced certain changes to their proposals to extend the disguised remuneration rules. The changes include some additional (and welcome) exclusions and other responses to concerns with the breadth of some of the earlier proposals. However, most of the earlier proposals are to be proceeded with in Finance Bill 2017.

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