Delays to Finance Bill and Making Tax Digital - KPMG United Kingdom
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TMD: Delays to Finance Bill and Making Tax Digital

Delays to Finance Bill and Making Tax Digital

The Finance Bill will now be published after the summer recess, and the timetable for the implementation of MTD has been delayed.


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With only six days of Parliamentary time left before summer recess at the time of the announcement, it is perhaps unsurprising that the Government has chosen to delay the Finance Bill, which had been expected to appear soon. The Bill will now be introduced as soon as possible after the summer recess, and will contain the provisions that were withdrawn from the Bill ahead of the general election. The Government has also confirmed that all policies originally announced to start from April 2017 will be effective from that date, and, due to a number of technical changes made to the legislation as it appeared in March, the Government has now published updated draft legislation on certain measures to give greater certainty about the content of the Bill to be published in the autumn.

The measures on which updated draft legislation has been published are:

  • The corporate interest restriction (CIR) rules – the changes made are mostly to fix minor errors, clarify the intended effect of the legislation, tighten some definitions and conditions, and to address some policy concerns raised with HMRC in consultation. No changes have been made to the 1 April 2017 start date or the overall structure of the CIR rules. To read more on the changes, click here to read our BEPS Action 4 Diary;
  • Hybrid and other mismatches – see our full article in this week’s edition;
  • Deemed domicile changes and IHT on UK residential property - whilst the updated draft clauses provide some clarity in relation to ‘cleansing’ of mixed funds, a number of uncertainties remain, including the extent of the provisions concerning the IHT treatment of collateral for loans taken out to finance UK residential property. It appears that affected taxpayers will have to await publication of the Bill in the autumn as well as promised HMRC guidance for further clarification;
  • Substantial Shareholding Exemption for institutional investors - the only change is to amend the definition of life assurance business for the purposes of the new subsidiary exemption for qualifying institutional investors. The previous requirement was that the interest in the investing company was held for the purpose of providing benefits to policy holders in the course of life assurance business. The amended requirement is that the interest in the investing company is held as part of the life assurance company’s long-term business fixed capital;
  • Corporate loss reform; and
  • Employment income provided through third parties.

As well as delaying the Finance Bill, the Government will also be delaying the implementation of Making Tax Digital (MTD). The new timetable will mean that it will only be from 2019 that businesses with a turnover over the VAT threshold (currently £85,000) will need to keep digital records, and then only for VAT purposes. Digital record keeping and quarterly reporting to HMRC will not be required for other taxes until at least 2020. However, MTD will be available on a voluntary basis for smaller businesses and for other taxes, to allow businesses more choice over when to go digital.

For further information please contact:

Grace Havard

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