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Draft Finance Bill 2018

The clauses for Finance Bill 2017 to 2018 have been ...

The clauses for Finance Bill 2017 to 2018 have been published in draft.


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On Wednesday 13 September, the draft clauses of Finance Bill 2017 to 2018 (which we will refer to as Draft Finance Bill 2018) were released, along with explanatory notes and tax information and impact notes (TIINs). The draft legislation is now available for consultation until 25 October, with the final contents of Finance Bill 2018 subject to confirmation at Autumn Budget 2017, the date of which has been confirmed as Wednesday 22 November.

In what was, by recent standards, a very short draft Bill, legislation for only eight measures was published as follows:  

Bank Levy: changes to scope and administration

The draft clauses implement the Government’s previously announced decision to restrict the scope of the Bank Levy to UK balance sheets from 2021, as well as making some administrative changes to the operation of the Levy. For further details, see our full article this week.

Income Tax: debt traded on a multilateral trading facility

The Government is introducing a new interest withholding tax exemption for debt traded on a multilateral trading facility operated by a recognised stock exchange regulated in a European Economic Area (EEA) territory. For more on this, see our full article this week.

Partnership taxation: proposals to clarify tax treatment

Draft legislation has been published which provides additional clarity over certain aspects of the taxation of partnerships, following the response to the August 2016 consultation which was published in March 2017. For more details, see our full article.

Termination payments: removal of foreign service relief (FSR)

The draft clauses remove FSR in cases where the relevant employee is UK tax resident in the tax year that their employment is terminated. The change is intended to take effect for terminations on or after 6 April 2018, subject to anti-forestalling provisions. The change is not extended to seafarers however; they are specifically carved out of the change such that the status quo is broadly preserved for them.

In light of the changes contained in Finance (No.2) Bill 2017 and this proposed amendment to FSR, it is advisable for employers to undertake a holistic review of how they deal with and report termination payments.

Tackling disguised remuneration - avoidance schemes

The draft clauses reintroduce the ‘close company gateway’ which is designed to make it clear that the disguised remuneration rules apply equally to owners of close companies. The close company gateway was originally deferred to allow HMRC to ensure it was sufficiently targeted; there were concerns that normal commercial transactions would also be affected.

The draft clauses also introduce a requirement for all employees affected by the new 2019 loan charge to report additional information to HMRC before 1 October 2019. The reporting requirement is necessary to allow HMRC to ensure that the 2019 loan charge has been complied with by taxpayers and to ensure that the double taxation relief provisions have been properly applied.

Noticeable by their absence however are the ‘transfer of liability’ provisions which are to accompany the 2019 loan charge. We understand that these provisions will set out who is responsible for the tax on the 2019 loan charge as between the employer, any intermediary and the individual taxpayer. The notes accompanying the draft clauses say only that they will be published later in 2017.

Offshore trusts: anti-avoidance

The draft legislation introduces anti-avoidance provisions in relation to payments and benefits from offshore trusts, which have effect from 6 April 2018.

Pensions Tax registration

Powers will be introduced for HMRC to register and de-register master trust pension schemes and schemes where the sponsoring employer is a dormant company.

Landfill Tax: disposals not made at landfill sites

This measure extends the scope of Landfill Tax to disposals made at sites without an environmental disposal permit, and clarifies what material is taxable at sites that do have a permit.

For further information please contact:

Grace Havard 

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