Finance Bill 2017 | KPMG Global
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Finance Bill 2017

Finance Bill 2017

Finance (No. 2) Bill 2016-17 was published on 20 March.


Head of Tax, Pensions and Legal Services

KPMG in the UK


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On 20 March, the Government published Finance (No. 2) Bill 2016-17 (Finance Bill 2017). The Bill, the first of two Finance Bills expected to be published this year, is the longest ever Finance Bill published - 762 pages long and, as has been widely reported in the press, weighing as much as a baby gorilla – which may surprise some considering the relative quietness of the Spring Budget. However, many of the measures in the Bill were announced under  the Chancellor’s predecessor George Osborne, and a number of the clauses had been published in December for consultation.

Our analysis of the key measures can be found on our dedicated webpage, and include:

New corporate interest restriction regime

From 1 April 2017 a new regime will restrict the tax deductibility of interest-like expenses for UK companies.

Hybrid and Other Mismatch rules amendments

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

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.

Reform of CT Loss Relief

New restriction on the use of carried forward losses. Most post-1 April 2017 losses will no longer need to be streamed and can be surrendered as group relief.

Patent Box – Cost Sharing Arrangements

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

Inheritance tax on UK residential property and related finance

UK residential property owned through certain non-UK structures and lenders providing debt finance will be subject to IHT.

Exemption from attribution of carried interest

HMRC’s proposed solution to avoid double tax on carry in trusts distributed to a beneficiary may result in unexpected tax liabilities.

Life insurance policies: recalculating gains on part surrenders 

Policyholders will be able to apply to HMRC to recalculate gains on part surrenders where the normal rules would produce a wholly disproportionate gain.

Fundamental changes for non-UK domiciled individuals

Non doms - are you ready for the fundamental change in the compliance landscape that starts on 6 April 2017?

Termination Payments

The Finance Bill contains significant changes to the taxation of termination payments which are due to come into effect from 6 April 2018. 


The previously announced measures on off-payroll working in the public sector are proceeding as anticipated. The main material change appears to be the requirement that public authorities must take ‘reasonable care’ in relation to determining employment status i.e. treating all off-payroll workers as caught by the new rules will not meet the legislative criteria.

Salary Sacrifice

The Finance Bill has clarified some areas although more work is required in other areas. But our primary concern continues to be that many employers will still not appreciate that the proposed legislation is wider than salary sacrifice and also impacts any arrangements where the employee can choose between cash and a benefit (e.g. car). As such, many will continue to think that, as they do not offer traditional salary sacrifice, no further action is required by them. 

Disguised remuneration

There is a welcome change in that the Government has decided to consult further on the Close Company Gateway test which was intended to greatly increase the scope of the legislation. As such, the provisions in this regard that were contained in the draft Finance Bill have been removed. The other changes in this area however, and in particular the 2019 loan charge, are proceeding broadly as anticipated.


For further information please contact :

Michelle Quest

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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