Finance Bill 2021 – L-day

Finance Bill 2021 – L-day

Draft legislation has been published for Finance Bill 2021 along with several new consultations and responses to consultations previously closed.


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In its annual ‘legislation day’ (known widely as ‘L-day’), on 21 July 2020, the Government published several draft clauses for inclusion in Finance Bill 2021 (which will be referred to in parliament as ‘Finance Bill 2020-21’). The legislation covered a number of items previously announced at the Spring Budget in March 2020. However, we did not see draft legislation on measures that are still subject to open consultations such as the proposed uncertain tax positions notification requirement so it is likely these will be published later in the year. There were also several new consultations published including on business rates and the carbon emissions tax as well as a roadmap for Making Tax Digital (MTD) within a strategy document setting out long-term plans for tax administration reform. In a busy week Finance Bill 2020 also received Royal Assent on 22 July and has now become Finance Act 2020.

Draft clauses published on a number of employment tax measures are discussed further in our separate roundup for employersDraft legislation was also published for the following items:

SDLT surcharge for non-UK residents - Please see our separate article for further details.

Corporate interest restriction (CIR) - Two technical amendments are to be made so that the CIR rules work as intended. The first amendment concerns the interaction of the CIR rules with the UK real estate investment trust (REIT) rules. This deals with a potential issue regarding the allocation of a CIR disallowance where a non-UK company is within the charge to UK corporation tax in respect of a UK property business but its residual business is not within the charge to UK corporation tax. The second amendment makes sure that no penalties arise for the late filing of an interest restriction return if there is a reasonable excuse for the failure.

New reliefs for housing co-operatives – Further to an announcement in the Spring Budget, HMRC have published draft legislation to relieve qualifying housing cooperatives from the 15 percent ‘envelope’ rate of SDLT and the charge to the annual tax on enveloped dwellings (ATED). Qualifying housing cooperatives are essentially ones that are neither publicly funded nor social housing cooperatives and do not have transferrable share capital. The ATED relief will take effect retrospectively from 1 April 2020. The SDLT relief is due to come into effect from Autumn Budget Day 2020.

Amendments to HMRC’s civil information powers – HMRC are to be given a new power to issue a ‘Financial Institution Notice’ to require financial institutions to provide information to HMRC when requested about a specific taxpayer, without the need for approval from the independent tribunal that considers tax matters.

Other legislation published related to the introduction of a new tax check for applications to renew some licenses including for taxi drivers and scrap metal dealers; an amendment to the VAT refund scheme to include the Welsh language television channel S4C; and a series of proposed legislative amendments aimed at tackling promoters and enablers of tax avoidance which is accompanied by a consultation.


In addition to the draft legislation a number of new consultations were opened. The most notable were as follows:

Business rates – HM Treasury is consulting on a wide-ranging review of the business rates system. The review will consider all elements of the current system, as well as exploring the potential strengths and weaknesses of alternatives to business rates such as property and online taxes. The consultation is in two phases with responses to the first part due by 18 September to inform an interim report. The remainder of the consultation will end on 31 October, ahead of the review’s conclusion in spring 2021.

The Government has also announced a postponement of the next revaluation of non-domestic property in England to 1 April 2023 (previously it was due on 1 April 2022). So that it better reflects the impact of COVID-19, it will be based on property values as of 1 April 2021 rather than the values at 1 April 2019.

Scope of R&D qualifying expenditure - A consultation has been opened on expanding the scope of qualifying expenditures for R&D tax credits to cover data and cloud computing costs. See our separate article on this. 

Carbon Emissions Tax – consultation has been opened on the details of the proposed new environmental tax which is to be brought in if a replacement for the EU Emissions Trading System is not introduced. Initially it will apply to permit holders of UK installations on excess emissions that exceed their annual tax emission allowance from 1 January 2021. The tax could also be extended to include emissions from other sectors in the future. The closing date is 29 September 2020.

Modernisation of stamp taxes on shares framework - HMRC have published a consultation on the future of stamp taxes on transactions in shares and securities, encompassing stamp duty and stamp duty reserve tax. The consultation invites views on the principles and design of a new framework for charging stamp taxes on these transactions. HMRC have been considering modernising stamp duty on shares for some time and the emergency COVID-19 procedures that have temporarily replaced the physical stamping of stock transfer forms have brought this into sharper focus. The consultation closes on 13 October 2020.

There were also consultations announced on the following:

It was also announced that consultations on the alcohol duty structures review and changes to small brewers’ relief would open in the Autumn.

In addition to the new consultations, the Government also published response documents on the following:

The future of tax administration

Finally, L-Day saw HMRC publish a ten year strategy for the future of tax administration. The strategy is to modernise the digital tax system with digital infrastructure and using closer to real-time information. At the heart of HMRC’s plan is the extension of MTD which is discussed in our separate article.

For further information please contact:

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