Policy paper

Budget 2018: overview of tax legislation and rates (OOTLAR)

Updated 6 June 2019

Introduction

This document sets out the detail of each tax policy measure announced at Budget 2018. It is intended for tax practitioners and others with an interest in tax policy changes, especially those who will be involved in consultations both on the policy and on draft legislation.

Finance Bill 2018-19 will be published on 7 November 2018.

References to Finance Bill 2018-19 refer to the Finance Bill which will be introduced to Parliament following Budget 2018. References to Finance Bill 2019-20 which will be introduced to Parliament following Budget 2019.

The information in the document is set out as follows:

Chapter 1 contains details of measures that are included in Finance Bill 2018-19.

Chapter 2 contains details of measures which are part of Budget 2018 but are not in Finance Bill 2018-19.

Table 1 lists measures which were announced on 6 July 2018 and which have not changed.

Table 2 lists measures in this document without a corresponding announcement in the Budget report, which are part of Budget 2018.

Annex A provides tables of tax rates and allowances for tax year 2019 to 2020 and tax year 2020 to 2021.

Annex B lists upcoming consultations, calls for evidence and other consultative documents announced at Budget 2018.

Annex C provides guidance on impact assessments in TIINs.

1. Finance Bill 2018-19

Income Tax

1.1 Income Tax: rates and thresholds: tax year 2019 to 2020

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to set the charge for Income Tax, and the corresponding rates, as it does every year. Finance Bill 2018-19 will set:

• the main rates, which will apply to non-savings, non-dividend income of taxpayers in England, Wales and Northern Ireland
• the savings rates, which will apply to savings income of all UK taxpayers
• the default rates, which will apply to a very limited category of income taxpayers that will not fall within the above two groups, made up primarily of trustees and non-residents

Income Tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. From April 2019 the Welsh Government will set a Welsh rate of Income Tax for non-savings, non-dividend income for Welsh taxpayers.

1.2 Personal allowance and basic rate limit

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to increase the personal allowance to £12,500 for 2019 to 2020. The basic rate limit will be increased to £37,500 for 2019 to 2020. The government also sets the personal allowance at £12,500 and basic rate limit at £37,500 for 2020 to 2021. For future years, increases to the personal allowance and basic rate limit will be indexed with the CPI. Changes to the basic rate limit, and higher rate threshold, will apply to England, Wales and Northern Ireland, and to savings and dividends income in the UK. Income Tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. Changes to the personal allowance will apply to the whole of the UK.

1.3 Tax treatment of social security income

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to confirm the Income Tax treatment of nine new and existing social security benefits. The legislation will confirm that the following eight benefits are exempt from Income Tax: Young Carer Grant, Best Start Grant, Funeral Expense Assistance and Discretionary Housing Payment (introduced by the Scottish government); Discretionary Support Scheme (overseen by the Northern Ireland Executive); and, Council Tax Reduction Scheme, Discretionary Housing Payment and the Flexible Support Fund (overseen by the UK government).

The legislation will confirm the Carer’s Allowance Supplement in Scotland is subject to Income Tax in accordance with the 2016 agreement between the Scottish government and the UK government on the Scottish Government’s Fiscal Framework.

The changes will have effect on and after Royal Assent of Finance Bill 2018-19.

The Tax Treatment of Social Security Benefits TIIN was published on 29 October 2018.

1.4 Charity small trading tax exemption increase

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to increase the charities’ small trading exemption limits. These limits apply to trading that does not relate to the charities’ primary purpose. The exemption recognises that in practice charities may engage in some small scale non-primary purpose trading without incurring a tax liability on the profits of that trade.

Currently the limits are set at £5,000 where turnover is under £20,000 and £50,000 where turnover exceeds £200,000. This measure will increase these small trading exemption limits for charities to £8,000 and £80,000 respectively.

The changes will have effect on and after 6 April 2019 for unincorporated charities and from 1 April 2019 for incorporated charities.

The Increases to charities’ small trading exemption limits TIIN was published on 29 October 2018.

1.5 Setting the starting rate for savings

As announced at Budget 2018, the 0% band for the starting rate for savings income will remain at its current value of £5,000 for 2019 to 2020.

This measure will apply to the whole of the United Kingdom.

Capital allowances

1.6 Structures and Buildings Allowance

As announced at Budget 2018, the government will introduce a new Structures and Buildings Allowance (SBA). This measure will provide relief for qualifying capital expenditure on new non-residential structures and buildings. Relief will be available for eligible expenditure incurred where all the contracts for the physical construction works are entered into on or after 29 October 2018. Relief will not be available for the costs of land or dwellings. A Technical Note is being published alongside Budget which provides further detail about this measure. The government will include a power to introduce the SBA in Finance Bill 2018-19, with detailed secondary legislation to follow.

1.7 Environmental Enhanced Capital Allowances

As announced at Budget 2018, the government will legislate by statutory instrument to update the Energy Technology List and Water Technology List that qualify for First Year Allowance. The government will also legislate in Finance Bill 2019-20 to end both schemes including the associated First Year Tax Credit.

The changes to the technology lists update the qualifying criteria to reflect technological advances and changes in standards. The updates to the lists will take effect in 2019.

The schemes will end on 31 March 2020 for companies and 5 April 2020 for unincorporated businesses. The FYTC, which is associated to the schemes, will end on 31 March 2020.

The Ending enhanced capital allowances for energy and water efficient plant and machinery TIIN was published on 29 October 2018.

1.8 Tax relief for electric charge-points

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to extend the first-year allowance for electric charge-points for four years. This will extend such allowances until 31 March 2023 for Corporation Tax and 5 April 2023 for Income Tax purposes.

The First-year allowance for electric charge-points TIIN was published on 29 October 2018.

1.9 Special writing down allowance rate reduction (8% to 6%)

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to change the special rate of writing down allowances for qualifying plant and machinery from 8% to 6% for businesses claiming capital allowances.

The changes will have effect from April 2019.

The Reduction of rate of special writing down allowance for capital allowances TIIN was published on 29 October 2018.

1.10 Costs of altering land for installing plant

The government will legislate in Finance Bill 2018-19 to clarify the exclusions from plant and machinery allowances for buildings, structures and alterations to land. The change is to sections 21 and 22 of Capital Allowances Act 2001. The measure amends sections 21 and 22 to make it clear that any reference to “plant” in section 23, List C does not apply to assets listed in sections 21 or 22.

1.11 Annual investment allowance temporary increase

As announced at Budget 2018, legislation will be introduced in Finance Bill 2018-19 to increase temporarily the Annual Investment Allowance from £200,000 to £1,000,000. These changes will have effect from 1 January 2019 to 31 December 2020.

The Temporary increase in the Annual Investment Allowance TIIN was published on 29 October 2018.

Corporation Tax

1.12 Corporate interest restriction: amendments

As announced at Autumn Budget 2017, and following consultation on draft legislation, the government will legislate in Finance Bill 2018-19 to make technical amendments to the corporate interest restriction rules to ensure the regime works as intended. The draft legislation and TIIN were published on 6 July 2018. Following consultation, the legislation and the TIIN have been revised.

1.13 Corporate interest restriction: tax responses to accounting standards for leasing

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to ensure that tax legislation, including the long funding lease and corporate interest restriction rules, continues to operate as intended after the introduction of the new accounting standard for leases, IFRS 16.

Draft legislation and the Income Tax and Corporation Tax: response to accounting changes for leasing TIIN were published on 6 July 2018.

Following consultation, the draft legislation has been revised to include minor changes to the rules for structured finance arrangements, writing down allowances for finance lessors and the treatment of long funding leases on adoption of IFRS 16. A change has also been made to the computational rules for the spreading of the transitional adjustment upon adoption of IFRS 16.

This measure will have effect for periods of account beginning on or after 1 January 2019. Certain amendments to the long funding lease rules only have effect for leases entered into on or after 1 January 2019.

The Changes to the Corporate Interest Restriction rules TIIN was published on 29 October 2018.

1.14 Corporation Tax (UK property income of non-UK residents)

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 so that non-UK resident companies that carry on a UK property business or have other UK property income will be charged to Corporation Tax, rather than being charged to Income Tax as at present.

Draft legislation and the UK property income of non-UK resident companies TIIN were published on 6 July 2018.

Following consultation, the legislation has been revised to provide further clarity on how the loan relationship and derivative contract rules will apply. In addition, a targeted anti-avoidance rule is introduced from 29 October 2018.

The draft legislation, explanatory note and an updated TIIN were published on 29 October 2018. The changes will have effect on and after 6 April 2020.

Guidance on the transitional rules as well as general guidance on Corporation Tax aimed at non-UK resident companies will be published during 2019 and before the change takes effect.

The Tax changes for UK property income of non-UK resident companies TIIN was published on 29 October 2018.

1.15 Transferable tax history mechanism and Petroleum Revenue Tax simplification

As announced at Autumn Budget 2017, the government will introduce in Finance Bill 2018-19 a transferable tax history mechanism for oil and gas companies that will remove tax barriers to new investment in the North Sea.

The government will also amend the Petroleum Revenue Tax rules on retained decommissioning costs to simplify the way older fields can be sold to new investors. Both of these measures will apply for transactions that receive Oil and Gas Authority approval on or after 1 November 2018. Draft legislation was consulted on over the summer and the legislation to be laid as part of the Finance Bill includes a number of small technical changes, introduced after consideration of the responses to the consultation.

1.16 Corporation Tax: amendments to reform of loss relief

As announced on 6 July 2018, the government will legislate amendments to the loss relief legislation in Finance Bill 2018-19 to ensure that the legislation works as intended and prevents relief for carried-forward losses being claimed in excess of that intended. Changes will be made to the legislation covering:

• the definition of ‘relevant profits’
• the computation of Basic Life Assurance and General Annuity Business (BLAGAB) profits
• the deductions allowance where a company is a member of more than one group
• the calculation of terminal relief
• shock losses of insurance companies being surrendered as group relief
• the cap on profits against which group relief for carried-forward losses may be allowed in certain circumstances
• other consequential provisions that are minor in nature

The draft legislation published on 6 July 2018 has been amended to include changes to the group relief cap on profits. The changes to the group relief cap apply from 1 April 2017, relevant profits and BLAGAB changes apply from 6 July 2018, and other changes from 1 April 2019.

1.17 Anti-tax Avoidance Directive - controlled foreign companies

As announced on 6 July 2018, the government will legislate in Finance Bill 2018-9 to make two changes to the controlled foreign company (CFC) rules. These changes relate to the definition of control and the treatment of certain profits generated by UK activity, and will ensure that the UK CFC rules comply with Council Directive (EU) 2016/1164, also referred to as the EU Anti-Tax Avoidance Directive (ATAD). The changes will take effect from 1 January 2019.

1.18 Anti-tax Avoidance Directive - hybrids

As announced on 6 July 2018, legislation will be introduced in Finance Bill 2018-19 to make two changes to the hybrid mismatch rules. These changes relate to the treatment of certain permanent establishments and the treatment of regulatory capital, and will ensure that the UK hybrid mismatch rules comply with Council Directive (EU) 2016/1164, also commonly referred to as the EU ATAD. These changes will take effect from 1 January 2020.

1.19 Permanent establishment: anti-fragmentation rule

The government will legislate in Finance Bill 2018-19 to give full effect to changes being made to its tax treaties. The legislation tackles the erosion of the tax base by multinationals by changing the definition of permanent establishment. It removes access to the exemption from having a UK permanent establishment when non-resident companies artificially fragment their business operations to avoid coming within the charge to Corporation Tax.

The Corporation Tax changes to the definition of permanent establishment TIIN was published on 29 October 2018.

1.20 Reform of the corporate intangible fixed assets regime

As announced at Budget 2018, and following a policy consultation carried out during spring 2018, the government intends to reform the corporate intangibles regime. The government will:

• publish detailed proposals on how the government intends to partially reinstate relief for acquired goodwill in the acquisition of businesses with eligible intellectual property
• alter the regime’s de-grouping charge rules so that a charge will not arise where de-grouping is the result of a share disposal that qualifies for the Substantial Shareholding Exemption

The government intends to legislate both in Finance Bill 2018-19. The changes to the de-grouping rules will have effect in relation to de-groupings occurring on or after 7 November 2018.

The Reform of de-grouping charge rules in the corporate intangibles regime TIIN was published on 7 November 2018.

1.21 Offshore receipts in respect of intangible property (previously Royalties Withholding Tax)

As announced at Autumn Budget 2017, legislation will be introduced in Finance Bill 2018-19 to tax income from intangible property held in low-tax jurisdictions to the extent that it is referable to UK sales. Following consultation, which ran from 1 December 2017 to 23 February 2018, the government is making changes to ensure that the policy is effective, applies as intended, and is not open to abuse. These include:

• collecting the tax by directly taxing offshore entities that realise intangible property income in low-tax jurisdictions, rather than through applying a withholding tax
• broadening the income in scope of the measure to include embedded royalties and income from the indirect exploitation of intangible property in the UK market through unrelated parties
• introducing a de minimis UK sales threshold of £10 million, an exemption for income that is taxed at appropriate levels, and an exemption for income relating to intangible property that is supported by sufficient local substance

The measure will take effect from 6 April 2019, with an anti-avoidance rule that applies from 29 October 2018. The response to the consultation and draft legislation will be published on 29 October 2018.

The Offshore receipts from intangible property TIIN was published on 29 October 2018.

1.22 Hybrid capital instruments

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to introduce new rules for the taxation of hybrid capital instruments to ensure that they are taxed in line with their economic substance, taking into account new Bank of England requirements for loss absorbency (known as ‘MREL’). The new rules will also eliminate mismatches between the tax treatment of instruments used to raise funds externally and those used to lend funds internally within a group. The rules cover issues by companies in any sector and replace current rules covering regulatory capital instruments issued by banks and insurers.

1.23 Diverted Profits Tax: amendments

The government will legislate in Finance Bill 2018-19 to amend the Diverted Profits Tax (DPT) rules. The legislation closes tax planning opportunities, makes clear that diverted profits that are subject to DPT will not also be subject to Corporation Tax and introduces modifications to the mechanics of the DPT legislation. This includes extending the DPT review period and to permit taxpayers to amend their Corporation Tax return during the first twelve months of the review period. These amendments will generally apply from Budget or Royal Assent of Finance Bill 2018-19, but will be deemed to have always had effect where they are wholly relieving.

Capital Gains Tax

1.24 Capital Gains Tax: tackling misuse of Entrepreneurs’ Relief

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to add two new tests to the definition of a personal company for Entrepreneurs’ Relief. These tests will require the claimant to have a 5% interest in both the distributable profits and the net assets of the company. The new tests must be met, in addition to the existing tests, throughout the specified period in order for relief to be due.

The measure will have effect for disposals on or after 29 October 2018.

The Changes to personal company tests for Entrepreneurs’ Relief TIIN was published on 29 October 2018.

1.25 Entrepreneurs’ Relief: minimum qualifying period

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to increase the minimum period throughout which certain conditions must be met to qualify for Entrepreneurs’ Relief, from one year to two years.

The measure will have effect for disposals on or after 6 April 2019, except where a business ceased before 29 October 2018. Where the claimant’s business ceased, or their personal company ceased to be a trading company (or the holding company of a trading group), before 29 October 2018, the existing one year qualifying period will continue to apply.

The Minimum qualifying period extension for Entrepreneurs’ Relief TIIN was published on 29 October 2018.

1.26 Entrepreneurs’ Relief: where shareholding ‘diluted’ below the 5% threshold

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to allow individuals whose shareholding is ‘diluted’ below the 5% qualifying threshold for Entrepreneurs’ Relief as a result of a new share issue to obtain relief for gains up to that time.

The Entrepreneurs’ Relief where shareholding ‘diluted’ below the 5% threshold TIIN was published on 6 July 2018. Following consultation, changes have been made to clarify and improve the computational and qualifying rules in the legislation.

The measure will have effect for shares held at the time of fundraising events which take place on or after 6 April 2019.

1.27 Taxing gains made by non-residents on UK immovable property

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to broaden the UK’s tax base to include disposals of all forms of UK land made by non-residents. This will include both direct disposals of UK land, and indirect disposals of entities that predominantly derive their value from UK land. Non-resident companies will be chargeable to Corporation Tax on their gains.

This measure extends the rules introduced in April 2015 applying to non-residents’ disposals of residential UK land. As part of the measure, the rules relating to ATAD-related gains will be abolished.

Following a consultation released at Autumn Budget 2017, a response document was published on 6 July 2018 alongside draft legislation on the core provisions. Following a further technical consultation, the full legislation will be introduced at Finance Bill 2018-19. The updated legislation includes a Schedule covering the rules as they will apply to collective investment vehicles. An updated TIIN published alongside the legislation.

The changes will take effect for disposals made on or after 6 April 2019.

1.28 Capital Gains Tax payment window

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to introduce a requirement for UK residents to make a payment on account of Capital Gains Tax following the completion of a residential property disposal. The new legislation will also replace and extend the existing reporting and payment on account rules for non-UK residents.

Draft legislation and the Capital Gains Tax payment window for residential property gains TIIN was published on 6 July 2018.

Following consultation, the legislation has been changed to:

• allow reasonable estimates of valuations and apportionment’s needed to compute the gain, where this information is not available before the payment deadline
• remove disposals by UK residents of non-UK properties from the rules
• remove non-UK resident companies from the reporting requirement

The above changes to the legislation will apply to disposals by non-UK residents on or after 6 April 2019. For UK residents the changes will have effect for disposals on or after 6 April 2020.

Inheritance Tax

1.29 Inheritance Tax: changes to residence nil rate band

As announced at Budget 2018, the government will introduce legislation in Finance Bill 2018-19 for amendments to the residence nil-rate band (RNRB) relating to downsizing provisions and the definition of ‘inherited’ for RNRB purposes. These amendments clarify the downsizing rules, and provide certainty over when a person is treated as ‘inheriting’ property. This will ensure the policy is working as originally intended. The government has not consulted on the changes. The changes will have effect from 29 October 2018.

VAT

1.30 VAT reverse charge: building and construction services and amendments to related anti-avoidance provisions

As announced at Budget 2018, legislation will be published alongside Finance Bill 2018-19 to provide for a VAT reverse change due to come into effect on 1 October 2019. This follows the conclusion of the technical consultation in June 2018, which resulted in improvements to legislation by aligning it to payments reported through the Construction Industry Scheme.

The government will legislate in Finance Bill 2018-19 to amend the avoidance provisions contained in primary legislation for a VAT reverse charge measure to specify that purchases of certain supplies will not count as turnover for VAT registration purposes.

The VAT reverse charge anti-avoidance changes TIIN was published on 29 October 2018.

Indirect Tax

1.31 Carbon Emissions Tax

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to introduce a new Carbon Emissions Tax to meet its carbon pricing commitments in the event of the UK leaving the EU without a deal in 2019. It will would apply to all stationary installations currently participating in the EU ETS. For 2019, a rate of £16 would apply to each tonne of carbon dioxide (or other greenhouse gas on a carbon equivalent basis) emitted over and above an installation’s emissions allowance.

The Carbon Emissions Tax rate is set out in Annex A.

The Carbon Emissions Tax TIIN was published on 29 October 2018.

1.32 Landfill Tax rates 2019 to 2020

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to increase the standard and lower rates of Landfill Tax in line with RPI, rounded to the nearest 5 pence. The change will have effect on and after 1 April 2019. The rates of Landfill Tax on and after 1 April 2018 are set out in Annex A.

1.33 Movement of soft drinks between the UK and the Isle of Man

As announced at Budget 2018, legislation will be introduced in Finance Bill 2018-19 amending section 1 of the Isle of Man Act 1979 to include the Soft Drinks Industry Levy (SDIL) in the list of common duties.

This measure also implements a change to the SDIL legislation, meaning that the movement of liable soft drinks between the UK and Isle of Man will not be seen as either an import or an export, as long as the levy rates of the UK and Isle of Man remain aligned.

This measure will have effect from 1 April 2019.

The Movement of soft drinks between the Isle of Man and UK under Soft Drinks Industry Levy TIIN was published on 29 October 2018.

1.34 Soft Drinks Industry Levy: penalties

As announced at Budget 2018 the government will allow penalties to be raised where businesses registered for the SDIL do not submit a timely quarterly return. The government will also ensure that a penalty can still be raised for non-payment of the SDIL in the event that certain provisions within the Finance (No.3) Act 2010 are enacted, by eliminating an inconsistency with those in Schedule 11 to the Finance Act 2017 (which makes supplementary amendments regarding the SDIL).

These changes will be legislated in Finance Bill 2018-19 and will have effect from April 2019.

The Penalty for late submission or failure to submit a return Soft Drinks Industry Levy TIIN was published on 29 October 2018.

Excise

1.35 Heavy goods vehicle road user levy

As previously announced, from 1 February 2019, HGVs that meet the latest Euro VI emissions standards will be eligible for a 10% reduction in the cost of the HGV Levy.

Those HGVs that do not meet the latest emissions standards will see their liability increase by 20%, except where the rate is already set at its maximum rate allowable under European legislation.

1.36 Uprating of the fuel and van benefit charges 2019 to 2020

As announced at Budget 2018, the government will increase the car and van fuel benefit charges by the September 2018 RPI. The van benefit charge will increase by the September 2018 CPI. These changes will have effect on and after 6 April 2019. The government will legislate by statutory instrument shortly after the publication of Finance Bill 2018-19 to ensure the changes are reflected in tax codes for 2019 to 2020.

1.37 Heated tobacco

As announced at Budget 2018 a new duty category ‘Tobacco for Heating’ will be introduced in Finance Bill 2018-19. The duty rate for ‘Tobacco for Heating’ will be 234.65 per kg.

The change will have effect on and after 1 July 2019.

The Tobacco products duty rates for 2018 TIIN was published on 29 October 2018.

1.38 Gambling Taxes - Remote Gaming Duty increase

The government will legislate in Finance Bill 2018-19 to increase the rate of Remote Gaming Duty to 21% with effect from 1 October 2019.

The Remote Gaming Duty increase TIIN was published on 29 October 2018.

1.39 Tobacco duty rates

As announced at Budget 2018:

• the duty rates for all tobacco products will be increased by 2% above RPI inflation from 6pm on 29 October 2018
• hand-rolling tobacco will also rise by an additional 1% above this to 3% above retail price inflation from 6pm on 29 October 2018
• the Minimum Excise Tax will be set at £293.95 per 1000 cigarettes. It will take effect from 6pm on 29 October 2018
• legislation for these changes will be introduced in Finance Bill 2018-19 and the rates and updated Minimum Excise Tax level set out in Annex A

The Tobacco products duty rates for 2018 TIIN was published on 29 October 2018.

1.40 Vehicle Excise Duty - rates for cars, vans and motorcycles

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to increase Vehicle Excise Duty (VED) rates for cars, vans, motorcycles and motorcycle trade licences by the Retail Prices Index with effect from 1 April 2019.

1.41 Alcohol Duty - uprating

As announced at Budget 2018, legislation will be introduced in Finance Bill 2018-19 to increase the following alcohol duty rates in line with inflation (based on RPI):

• all wine and made-wine rates at or below 22% alcohol by volume (abv)
• sparkling cider and perry exceeding 5.5% abv but less than 8.5% abv

These changes will take effect from 1 February 2019.

The duty rates on beer, spirits, wine and made wine exceeding 22% abv, still cider and perry, and sparkling cider and perry of a strength not exceeding 5.5% abv have been frozen.

Rates and allowances are set out in Annex A.

The Increase in Alcohol Duty rates TIIN was published on 29 October 2018.

1.42 Alcohol Duty - mid-strength cider

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to introduce a new duty band for still cider of a strength of at least 6.9% but not exceeding 7.5% alcohol by volume, to encourage the production and consumption of lower-strength ciders. This follows the ‘Alcohol structures’ consultation announced at Spring Budget 2017.

The rate of duty for the new band will be £50.71. The change will take effect from 1 February 2019.

The Increase in Alcohol Duty rates TIIN was published on 29 October 2018.

1.43 Air Passenger Duty - rates for 2020 to 2021

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to increase long-haul APD rates in line with RPI. Short-haul rates will not rise. The new rates will apply from 1 April 2020.

The Air Passenger Duty rates from 1 April 2020 to 31 March 2021 TIIN was published on 29 October 2018.

Stamp Taxes

1.44 Stamp Duty, Stamp Duty Reserve Tax and Stamp Duty Land Tax: resolution of financial institutions

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to ensure that Stamp Duty, SDRT and SDLT are not chargeable on exercise of resolution powers under the UK special resolution regime for managing failing financial institutions. The exemption will be limited to the temporary transfer of shares or land to a bridge entity, and the transfer of shares in exchange for temporary certificates issued to creditors that identify their entitlement to the shares. This will simplify and strengthen the process of resolving a failed financial institution and help to ensure that the ‘no creditor worse off’ principle is upheld.

Following publication of draft legislation on 6 July 2018, changes have been made which will extend the exemption to other types of financial institutions in resolution and certain transfers covered by the resolution regime.

The change will have effect for transfers made on and after Royal Assent of Finance Bill 2018-19.

1.45 Stamp Duty Land Tax: first-time buyers relief - extension of relief to all purchasers of qualifying shared ownership property

As announced at Budget 2018, the government will extend first-time buyers relief to include qualifying shared ownership property purchases, whether or not the purchaser elects to pay SDLT on the market value of the property. The first £300,000 of an initial share purchased will not be liable to SDLT. The remainder of the initial share will be chargeable at 5% on amounts over £300,000. No SDLT will be chargeable on the lease. Relief is not available on any further shares purchased. The relief will not apply to purchases of properties valued over £500,000. This change will apply to relevant transactions with an effective date on or after 29 October 2018, and will also be backdated to 22 November 2017.

The Extension of Stamp Duty Land Tax First Time Buyers’ Relief TIIN was published on 29 October 2018.

1.46 Stamp Duty Relief for Share Incentive Plans

The government will legislate in Finance Bill 2018-19 to amend section 95 Finance Act 2001. This will remove any reference to approved Share Incentive Plans or approved SIPs and replace with Schedule 2 SIPs. This amendment will ensure consistency across all legislation for share incentive plans and confirms that the existing stamp duty relief continues to apply. The amendment will have effect from 6 April 2014, when similar changes were introduced to Income Tax (Earnings and Pensions) Act 2003.

1.47 Stamp taxes on shares consideration rules

As announced at Budget 2018, a targeted market value rule for Stamp Duty and Stamp Duty Reserve Tax (SDRT) will be introduced for listed securities transferred to connected companies. Where the rule applies, the transfer will be chargeable based on the higher of the amount or value of the consideration (if any) for the transfer or the market value of the securities. Legislation will be published on Budget Day. The rule will come into force on Budget Day.

The government will also consult on aligning the Stamp Duty and SDRT consideration rules and introducing a general connected party market value rule. Reforming the consideration rules will simplify Stamp Taxes on shares and prevent contrived arrangements being used to avoid tax. The consultation will be published on 7 November 2018.

The Stamp Duty Relief for Share Incentive Plans TIIN was published on 29 October 2018.

1.48 Stamp Duty Land Tax Higher Rates - minor amendments

The government will legislate in Finance Bill 2018-19 to extend from 3 months to 12 months the time allowed to amend a tax return relating to Higher Rates for Additional Dwellings (HRAD) for those who sell their old home more than 12 months after they buy a new home. It will also clarify the meaning of major interest in land for the general purpose of HRAD. These changes apply from 29 October 2018.

Avoidance and evasion

1.49 Profit fragmentation

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to introduce targeted legislation that aims to prevent UK businesses from avoiding UK tax by arranging for their UK-taxable business profits to accrue to entities resident in territories where significantly lower tax is paid than in the UK. The taxable UK profits will be increased to the actual, commercial level.

Draft legislation and TIIN - Profit fragmentation were published on 6 July 2018.

Following consultation, changes have been made to the draft legislation to remove the duty to notify HMRC of relevant arrangements meeting certain criteria, to clarify the adjustments required to be made under this legislation, and to make a number of small technical changes.

The measure will have effect from 1 April 2019 onwards for Corporation Tax and 6 April 2019 for Income Tax and class 4 National Insurance contributions, and will apply to all profits diverted on or after those date.

The Tax avoidance involving profit fragmentation for Income Tax and Corporation Tax TIIN was published on 7 November 2018.

Tax Administration

1.50 Extension of security deposit legislation

As announced at Budget 2017, the government will legislate in Finance Bill 2018-19 to extend existing security deposit legislation to include Corporation Tax and Construction Industry Scheme deductions. The government consulted on the implementation of this change between 13 March and 8 June 2018. A summary of responses and draft Finance Bill Legislation was published on 6 July. Since then minor changes have been made to the draft legislation, including to remove provision for new information powers that are now considered unnecessary, and to include a technical amendment to the existing PAYE provisions. Detailed provisions will be set out in regulations, which will be published for comment.

1.51 Power to make consequential amendments

As announced at Budget 2018, the government will legislate in Finance Bill 2018-19 to introduce a power which permits the government to make minor amendments to ensure that tax law continues to operate as it does now if the UK leaves the EU without a deal.

This measure allows the government to make minor technical amendments, including: replacing references to the ‘EU’ with references to the ‘EU and UK’ in legislation, amendments consequential to other changes to the law in preparation for EU Exit; and amendments to change values in euros into values in sterling. It also provides for technical changes to an existing power which permits the government to bring international tax agreements into effect in UK law, mirroring a provision currently contained in legislation that gives effect to EU law; and removes references to EU legislation when HMRC are considering whether, and to the extent which, a taxpayer may be unjustly enriched by repayment of Insurance Premium Tax, Landfill Tax, or Excise Duty.

1.52 Amendment to interest provisions for late payment, repayments and penalties

As announced on 19 July 2018 the government will amend legislation on the interest charged on unpaid Corporation Tax and Diverted Profits Tax to confirm existing policy. The Budget also announces similar changes to clarify legislation for the interest charged on PAYE penalties. Both these changes apply retrospectively and will be included in the 2018-19 Finance Bill.

1.53 Voluntary tax returns

As announced at Budget 2018, legislation will be introduced in Finance Bill 2018-19 to confirm HMRC’s existing policy of treating tax returns sent in voluntarily as legally valid returns. The legislation will apply retrospectively from April 1996.

The Income Tax, Capital Gains Tax and Corporation Tax voluntary tax returns TIIN was published on 29 October 2018.

1.54 Statutory remedy regarding advance Corporation Tax

The government will legislate in Finance Bill 2018-19 to introduce a new statutory remedy in relation to advance Corporation Tax. The measure will apply from Royal Assent.

The New statutory remedy for advance Corporation Tax TIIN was published on 29 October 2018.

1.55 Extension of offshore time limits

As announced at Autumn Budget 2017 the government will legislate in Finance Bill 2018-19 to increase the assessment time limit for offshore tax non-compliance to 12 years for Income Tax, Capital Gains Tax and Inheritance Tax. Where there is deliberate behaviour the time limit remains at 20 years. Public consultation opened on 19 February 2018 and closed on 14 May 2018. The response document, draft legislation and a TIIN were published on 6 July 2018. Following consultation in summer 2018, the legislation clarifies that the extended time limits will apply unless international agreements mean HMRC already has the information needed to assess the tax due.

The Offshore receipts from intangible property TIIN was published on 29 October 2018.

2. Measures not in the Finance Bill 2018-19

Income Tax

2.1 Social Investment Tax Relief review

As announced at Autumn Statement 2016, the government will publish a call for evidence on the Social Investment Tax Relief early in 2019. The review will consider why take up of the scheme is lower than anticipated, and the design and targeting of the relief.

2.2 Enterprise Investment Scheme knowledge-intensive fund structure

Following a policy consultation carried out during spring 2018, the government will legislate in Finance Bill to reform the Enterprise Investment Scheme (EIS) rules for approved funds. The rules will be amended to:

• require approved funds to focus on investments in knowledge-intensive companies
• give funds a longer period over which to invest fund capital
• allow investors in approved funds to set their Income Tax relief against liabilities in the year before the fund closes

The government plans to publish draft legislation for consultation in summer 2019.

The changes will have effect from 6 April 2020.

2.3 Consultation on the taxation of trusts

As announced at Autumn Budget 2017, the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent.

2.4 Gift Aid Small Donations Scheme - Small Donations Scheme

As announced at Budget 2018, the government will, by secondary legislation, increase the Gift Aid Small Donations Scheme individual donation limit to £30.

The change will have effect from 6 April 2019 subject to parliamentary timetable.

2.5 Legislating the existing tax treatment of expenses for unpaid officeholders

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 so that expenses paid or reimbursed to unpaid office-holders are exempt from Income Tax when incurred because of their voluntary duties. Tax relief would not otherwise be available on these expenses under the general deductions rules. Corresponding legislation will also be introduced to mirror the Income Tax exemption for National Insurance contributions. The change will have effect on and after Royal Assent of Finance Bill 2019-20.

2.6 Retail Gift Aid reducing the frequency of letters to donors

As announced at Budget 2018, the government will introduce a change to the Retail Gift Aid scheme from April 2019, relaxing the requirement to issue letters annually to donors. Charities will be able to choose to issue letters once every three years rather than every year, where a donor’s total donations in a tax year are worth less than £20.

2.7 Shared occupancy test for rent-a-room relief

Following consultation on draft legislation, to maintain the simplicity of the system, the government will not include legislation for the ‘shared occupancy test’ in Finance Bill 2018-19.

2.8 Address non-compliance with the off-payroll working rules

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 to reform the off-payroll rules in the private sector. Responsibility for operating the existing off-payroll working rules, and deducting any tax and NICs due, will move from individuals to the organisation, agency or other third party paying an individual’s personal service company. Small organisations will be exempt and this change will bring private sector organisations in line with public sector bodies and agencies. The change will come into effect from 6 April 2020.

2.9 Individual Savings Accounts and Child Trust Funds

As announced at Budget 2018, the Individual Savings Account adult subscription limit for 2019 to 2020 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs and Child Trust Funds for 2019 to 2020 will be uprated in line with CPI to £4,368.

2.10 Child Trust Fund: announcing consultation on maturity

As announced at Budget 2018, the government will consult in 2019 on draft regulations to ensure that Child Trust Fund accounts retain their tax-free status after maturity.

2.11 Lifetime allowance: ongoing CPI increase

As announced at Spring Budget 2015, the lifetime allowance for pension savings will increase by CPI. It will rise to £1,055,000 for the tax year 2019 to 2020.

Employment taxes and benefits

2.12 Response to the consultation on taxation of self-funded work related training costs

Following consultation responses indicating that tax relief is unlikely to be effective in addressing the barriers to learning or incentivising training, the government is maintaining the scope of tax relief currently available to employees and the self-employed for work-related training costs.

The consultation response document has been published alongside Budget 2018.

2.13 Employment Allowance Reform

As announced at Budget 2018, the government will legislate to restrict access to the National Insurance contributions (NICs) Employment Allowance to employers with an employer NICs liability below £100,000 in their previous tax year. Where employers are connected under the Employment Allowance rules the threshold will apply to their aggregated liability. This change will take effect from 2020.

2.14 Delay to National Insurance Contributions reforms of termination payments and income from sporting testimonials

As announced at Budget 2018, the government will not abolish Class 2 NICs during this Parliament. There are two remaining measures in the draft NICs Bill published on 5 December 2016: reforms to the NICs treatment of termination payments and income from sporting testimonials. The government still intends to legislate for these reforms, which will take effect from April 2020.

2.15 Tax and administrative treatment of short term business visitors

As announced at Budget 2018, the government will introduce secondary legislation to amend the Income Tax (Pay As You Earn) Regulations 2003, extending the Pay PAYE reporting and payment deadlines to 31 May for companies using the PAYE special arrangement for Short Term Business Visitors. The PAYE special arrangement limit for UK workdays in the tax year will be extended from 30 days or less to 60 days or less. These changes follow the consultation which closed 6 August 2018. The changes will have effect from 6 April 2020.

Corporation Tax

2.16 Corporate capital loss restriction

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 to restrict companies’ use of carried-forward capital losses to 50% of capital gains from 1 April 2020. The measure will include an allowance that allows companies unrestricted use of up to £5 million capital or income losses each year, meaning that 99% of companies will be financially unaffected.

The Corporate Capital Loss Restriction - consultation on delivery consultation paper was published on 29 October 2018 and draft legislation will be published in summer 2019. An anti-forestalling measure to support this change will have effect on and after 29 October 2018.

2.17 Preventing abuse of the Research and Development tax relief for small and medium-sized enterprises

As announced at Budget 2018, Finance Bill 2019-20 will introduce a limit on the amount of payable tax credit that can be claimed by a company under the R&D SME tax relief. The limit will be set at three times the company’s total PAYE and National Insurance contribution (NICs) payment for the period. The change will have effect for accounting periods beginning on or after 1 April 2020. Any loss that a company cannot surrender for a payable credit can be carried forward and used against future profits. We will consult on this change.

2.18 Insurance contracts: response to new accounting standards

A new international accounting standard for insurance contracts, IFRS 17, which will be effective from 1 January 2021, introduces significant changes to how contracts are recognised, measured, presented and disclosed. For a number of insurance companies that are affected (mainly quoted companies) there may be changes to timings of revenue recognition and large transitional adjustments. This may impact the timing of tax receipts.

The practical implications of the new standard are not yet clear, and evidence is not yet available to assess the tax impact. The government will run an informal consultation to consider if changes are required in Finance Bill 2019-20 to the taxation treatment of insurance contracts in the light of the accounting changes.

2.19 Digital Services Tax

As announced at Budget 2018, from April 2020, the government will introduce a new 2% tax on the revenues of certain digital businesses which derive value from their UK users. The tax will:

• apply to revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces
• apply to revenues from those activities that are linked to the participation of UK users, subject to a £25m per annum allowance
• only apply to groups that generate global revenues from inscope business activities in excess of £500m per annum
• include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins

The government will consult on the detailed design of the Digital Services Tax and legislate in Finance Bill 2019-20.

Capital Gains Tax

2.20 Capital Gains Tax private residence relief: reform of ancillary reliefs

As announced at Autumn Budget 2018, from April 2020 the government will make two changes to private residence relief:

• the final period exemption will be reduced from 18 months to 9 months. There will be no changes to the 36 months that are available to disabled persons or those in a care home
• lettings relief will be reformed so that it only applies in circumstances where the owner of the property is in “shared-occupancy” with a tenant

The government will consult on the detail of both of these changes and other technical aspects.

Inheritance Tax

2.21 Inheritance tax - trusts settlement definition

As announced at Budget 2018, the government will introduce legislation in Finance Bill 2019-20 to reflect HMRC’s established legal position in relation to the Inheritance Tax (IHT) treatment of additions to existing trusts. The legislation will confirm that additions of assets by UK-domiciled (or deemed domiciled) individuals to trusts made when they were non-domiciled are not excluded property. The legislation will apply to IHT charges arising on or after the date on which Finance Bill 2019-20 receives Royal Assent, whether or not the additions were made prior to this date.

Legislative amendments will also be made to ensure that transfers between trusts made after the date on which Finance Bill 2019- 20 receives Royal Assent will be subject to additional excluded property tests.

VAT

2.22 The VAT (Input Tax) (Specified Supplies)

As announced in a Written Ministerial Statement on 19 July 2018, the government will legislate to restrict the application of the Specified Supplies Order in certain circumstances to prevent a version of VAT avoidance (offshore looping) that involves UK insurers gaining a competitive advantage by setting up associates in non-VAT territories and using these associates to supply their UK customers.

The change will have effect on and after 1 March 2019.

The Changes to the VAT specified supplies anti-avoidance TIIN was published on 29 October 2018.

2.23 VAT - higher education amendments

As announced at Budget 2018, the government will amend VAT legislation to ensure continuity of VAT treatment for English higher education providers under the Higher Education and Research Act by enabling bodies registered with the Office for Students in the Approved (fee cap) category to exempt supplies of education.

HMRC will provide further guidance for providers ahead of the 2019 to 2020 academic year.

2.24 VAT, Air Passenger Duty and tourism in Northern Ireland

As announced at Autumn Budget 2017, the government is publishing the response to the call for evidence on the impact of VAT and APD on tourism in Northern Ireland, launched at Spring Statement 2018. There will be no changes to the VAT or APD regimes in Northern Ireland at this time. The government will continue to explore ways to support a successful and growing tourism industry. In particular, establishing a technical working group to consider the practical and legal challenges to changing short-haul APD in Northern Ireland.

The response document can be found here.

2.25 VAT - registration threshold

As announced at Budget 2018, the VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2020. There will be no revisions to existing legislation and no new legal provisions will be introduced. Therefore legislation will continue as follows:

• the taxable turnover threshold which determines whether a person must be registered for VAT will remain at £85,000
• the taxable turnover threshold which determines whether a person may apply for deregistration will remain at £83,000

The further two year period ends on 31 March 2022.

The VAT thresholds remain unchanged TIIN was published on 29 October 2018.

2.26 Alternative method of VAT collection - split payment

Following the consultation launched at Spring Statement 2018, the government will publish a government response document on 7 November 2018.

The government believes that a split payment model, developed in close cooperation with stakeholders in the banking and payments sectors, could radically improve the way VAT is collected and reduce fraud.

The government has therefore announced an industry working group to explore next steps, more detail can be found in the response document.

2.27 VAT: unfulfilled supplies

As announced at Budget 2018, the government will amend rules from 1 March 2019 to bring consistency to the VAT treatment of prepayments. This change will bring all prepayments for goods and services into the scope of VAT where customers have failed to collect what they have paid for and have not received a refund.

A Revenue & Customs Brief giving full details of the change will be published before the end of the year.

2.28 VAT: adjustments to Regulation 38

As announced at Budget 2018, the government will introduce new rules for the adjustments to VAT following retrospective reductions in the price of goods or services.

Businesses will have to adjust their VAT returns within set time limits and send a credit note to their customers. This will ensure that such adjustments are only made in respect of genuine price reductions. The changes will be made by secondary legislation, and will come into force in September 2019.

Draft legislation will be published in 2019 and a TIIN for this measure will be published alongside the draft legislation.

2.29 Amendment to guidance for VAT groups on bought in services

As announced at Budget 2018, HMRC will revise existing guidance for VAT groups to clarify which overseas services can be classified as bought-in services to ensure that such services are subject to UK VAT. HMRC will share the draft guidance with businesses and provide a lead in time for implementation.

The changes will have effect on and after 1 April 2019. The draft guidance will be made available to business groups in November.

Indirect Tax

2.30 Plastics tax

As announced at Budget 2018, the government will introduce a tax on the production and import of plastic packaging from April 2022. This follows the government’s response to the call for evidence on tackling the plastic problem, which was published on 18 August 2018. Subject to consultation, this tax will apply to plastic packaging which does not contain at least 30% recycled plastic. The consultation will launch in the coming months. Any resulting legislation will be introduced in a future Finance Bill.

2.31 Aggregates Levy rates 2019 to 2020

As announced at Budget 2018, the government will freeze the Aggregates Levy rate for 2019 to 2020, but intends to return the Levy to index-linking in future.

The Aggregates Levy rate on and after 1 April 2018 is set out in Annex A.

2.32 Landfill Tax rates-2020 to 2021

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 to increase the standard and lower rates of Landfill Tax in line with Retail Prices Index, rounded to the nearest 5p. The change will have effect on and after 1 April 2020.

The Increase of the Landfill Tax rates TIIN was published on 29 October 2018.

2.33 Landfill Communities Fund - 2019 to 2020

As announced at Budget 2018, the government will set the value of the Landfill Communities Fund for 2019 to 2020 at £32.9 million, with the cap on contributions by landfill operators remaining at 5.3% of their Landfill Tax liability.

2.34 Climate Change Levy main rates

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 to continue to re-balance the electricity and gas main rates of Climate Change Levy (CCL). The electricity rate will be lowered in 2020 to 2021 and 2021 to 2022, and the gas rate will increase in these years so that it reaches 60% of the electricity main rate by 2021 to 2022. Other fuels such as coal will continue to align with the gas rate. The discount for sectors with Climate Change Agreements will change to reflect the changes to CCL main rates, such that businesses in the scheme will only be subject to an increase to their CCL liability in line with the Retail Prices Index.

As announced at Autumn Budget 2017, the rate of CCL for liquefied petroleum gas will remain frozen at the 2019 to 2020 level in both 2020 to 2021 and 2021 to 2022.

The main and reduced rates of CCL from 1 April 2018 are set out in Annex A.

2.35 Carbon Price Support rates

As announced at Budget 2018, the government will freeze the CPS rate at £18 per tonne of carbon dioxide emitted for 2020 to 2021.

The CPS rates between 1 April 2016 and 31 March 2021 are set out in Annex A.

Excise

2.36 Vehicle Excise Duty - rates for vans

Following a consultation on reforming VED to incentivise van drivers to make the cleanest choices when purchasing a new van, the government will shortly publish a government response to the consultation.

2.37 Fuel Duty - main rates and alternative fuels rates

As previously announced, fuel duty rates will remain frozen for the tax year 2019 to 2020. Following an internal review announced at Autumn Budget 2017, the government will extend the current differential between alternative and main road fuel duty rates until 2032 to support the decarbonisation of the UK transport sector, subject to review in 2024.

The fuel duty rates are set out in Annex A.

2.38 Vehicle Excise Duty - HGV rates for 2019 to 2020

As announced at Budget 2018, the government will freeze rates of VED for heavy goods vehicles (HGVs) for the tax year 2019 to 2020, which includes all rates linked to the basic goods rate.

2.39 Vehicle Excise Duty - exemption for blood bikes

As announced at Budget 2018, the government will legislate in Finance Bill 2019-20 to exempt from VED motorcycles and cars owned by the Nationwide Association of Blood Bikes, used for the transportation of medical products.

2.40 Alcohol Duty: simplification

As announced at Budget 2018, the government will not be undertaking further consultation in 2018-19 to simplify the administration of alcohol duty. In the longer term, the government remains committed to consulting on and implementing reforms to alcohol duty, as previously announced in the consultation response to “Simplifying the administration of Alcohol Duty”, published on 7 November 2017, and reducing the administrative burden on businesses.

2.41 Small Brewers Relief

As announced at Budget 2018, the government will review how small brewery beer relief is currently structured.

2.42 Post duty point dilution

The government will legislate in Finance Bill 2019-20 to prevent the practice of diluting certain alcohol products after excise duty has been calculated. This follows a review of the practice as announced at Autumn Budget 2017.

The government plans to publish draft primary legislation and regulations in summer 2019. The change will have effect after regulations have been laid, following Royal Assent of Finance Bill 2019-20.

2.43 Company car tax and Vehicle Excise Duty - carbon dioxide emission regime

As announced at Budget 2018, the government will review the impact of the Worldwide harmonised Light-vehicles Test Procedure (WLTP) on the VED and company car tax systems.

As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2019-20 to confirm that, for the purposes of VED and company car tax - the applicable carbon dioxide figure for cars will be based upon WLTP.

For cars registered prior to 6 April 2020, HMRC will continue to use the current New European Driving Cycle (NEDC) test procedure for the purposes of collecting company car tax. Similarly, cars first registered prior to 1 April 2020 will maintain their current VED treatment.

Stamp Tax

2.44 Annual Tax on Enveloped Dwellings increases in annual chargeable amounts for the 2019 to 2020 chargeable period

The ATED charges will rise by 2.4% from 1 April 2019 in line with the September 2018 Consumer Prices Index. This will be delivered by Statutory Instrument. A TIIN has not been published for this measure as it is a routine legislative change. Annex A shows the property bands and what the revised charges will be for the 2019 to 2020 chargeable period.

2.45 Stamp Duty Land Tax for non-residents

The government will publish a consultation in January 2019 on a Stamp Duty Land Tax surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

Avoidance and evasion

2.46 Online platforms role in ensuring tax compliance

The government will publish its response to the call for evidence ‘The Role of Online Platforms in Ensuring Tax Compliance by Their Users’, which was launched at Spring Statement 2018. This will set out the government’s intention to improve guidance for people and businesses earning money through online platforms, and to explore how greater use of data can further support sustainable compliance with the tax rules.

2.47 Electronic Sales Suppression

As announced at Budget 2018, the government will publish a call for evidence later in the year on electronic sales suppression. Electronic Sales Suppression refers to the misuse of electronic point of sale functions (for example, till systems) in order to hide or reduce the value of individual transactions and the corresponding tax liabilities.

2.48 Conditionality: hidden economy

Following the consultation, ‘Tackling the hidden economy: public sector licensing’, published in December 2017, the government will consider legislating at Finance Bill 2019-20 to introduce a tax registration check linked to licence renewal processes for some public sector licences. Applicants would need to provide proof they are correctly registered for tax in order to be granted licences. This would make it more difficult to operate in the hidden economy, helping to level the playing field for compliant businesses.

2.49 Tax abuse and insolvency

The government will introduce legislation in Finance Bill 2019-20 to allow HMRC to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency. This will have effect from Royal Assent of Finance Bill 2019-20.

2.50 Offshore tax compliance strategy

The government will publish an updated offshore tax compliance strategy. This will build on the substantial progress the UK has made in tackling offshore tax evasion and non-compliance since the government’s previous strategy was published in 2014.

Tax Administration

2.51 Protecting your taxes in insolvency

As announced at Budget 2018, from 6 April 2020, the government will change the rules so that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers and temporarily held in trust by the business go to fund public services, rather than being distributed to other creditors. This reform will only apply to taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE Income Tax, employee National Insurance contributions and Construction Industry Scheme deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as Corporation Tax and employer National Insurance contributions. This will be legislated for in Finance Bill 2019-20.

2.52 Amendments harmonisation

The government is publishing a call for evidence into how tax returns are amended. The current process can be complex, and the government is keen to modernise and simplify it.

2.53 Amendments to the general anti-abuse rule

Legislation will be introduced in Finance Bill 2019-20 to make minor procedural and technical changes to the general anti-abuse rule. The changes will come into effect following Royal Assent.

2.54 Penalties reform

As announced at Autumn Budget 2017, the government consulted in summer 2018 on draft legislation for new late payment and late submission sanctions. The government remains committed to the reform and intends to legislate in a future Finance Bill, to allow for more time to consider further the communications needed for successful implementation. The government will provide notice before these measures are implemented.

2.55 Amending HMRC’s civil information powers

The government’s consultation on proposed technical changes to Schedule 36 to Finance Act 2008 closed on 2 October 2018. The proposed changes aim to improve HMRC’s processes for accessing third party information. A response to this consultation, including next steps for implementation, will be published in due course.

Table 1: Unchanged Measures

This table lists measures which are part of Finance Bill 2018-19 where draft legislation was published for consultation on 6 July 2018, and where the draft legislation is unchanged.

Income Tax

Simplification of donor benefits rules for charities

Employment Tax and Benefits

Amendment to OpRA provisions for taxable cars Relief for benefits in kind on electric cars at work Relief for emergency vehicles Reform to employers’ contributions into life assurance and certain pension schemes

Corporation Tax

Anti-tax Avoidance Directive - Exit taxes

Employment Tax and Benefits

Abolition of receipt checking for subsistence benchmark scale rates Legislate existing overseas scale rates for accommodation and subsistence

Capital Gains Tax

CGT: deferral of payment for certain capital gains tax charges that arise when certain individuals and trustees of settlements cease to be UK tax resident

VAT

VAT grouping VAT on Vouchers

Indirect Tax

Climate Change Levy: exemptions for mineralogical and metallurgical processes

Excise

Zero emission taxis Gaming Duty return periods

Stamp Tax

Stamp duty land tax: changes to the filing and payment process

Tax Administration

Legislating the Double Taxation Dispute Resolution Directive International Tax Enforcement: Disclosable Arrangements

Table 2: Measures in this document without a corresponding announcement in the Budget report

Title	Paragraph number
Abolition of receipt checking for subsistence benchmark scale rates	Unchanged
Alcohol Duty: Simplification	2.40
Amending HMRC’s Civil Information Powers	2.55
Amendment to interest provisions for late payment , repayments and penalties	1.52
Amendment to OpRA provisions for taxable cars	Unchanged
Amendments Harmonisation	2.52
Anti-tax Avoidance Directive - Controlled Foreign Companies	1.17
Anti-tax Avoidance Directive- Exit taxes	Unchanged
ATED Increases in Annual Chargeable Amounts for the 2019-2020 chargeable period	2.44
Capital Gains Tax payment window	1.28
Climate Change Levy: exemptions for mineralogical and metallurgical processes	Unchanged
Corporate Interest Restriction: Amendments	1.12
Corporate Interest Restriction: Tax responses to accounting standards for leasing	1.13
Corporation tax (UK property income of non-UK residents)	1.14
Corporation Tax: amendments to reform of loss relief	1.16
Costs of altering land for installing plant	1.10
Diverted Profits Tax: amendments	1.23
Enterprise Investment Scheme (EIS) knowledge-intensive fund structure	2.2
Extension of Offshore Time Limits	1.55
Extension of security deposit legislation	1.50
HGV road user levy	1.35
IHT - trusts settlement definition	2.21
IHT: Changes to Residence Nil Rate Band	1.29
Insurance contracts: response to new accounting standards	2.18
Landfill Communities Fund- 2019-2021	2.33
Landfill Tax rates 2019 to 2021	1.32
Landfill Tax rates 2020 to 2021	2.32
Legislate existing overseas scale rates for accommodation and subsistence	Unchanged
Legislating the existing tax treatment of expenses for unpaid office-holders	2.5
Penalties Reform	2.54
Permanent establishment: anti- fragmentation rule	1.49
Relief for benefits in kind on electric cars at work	Unchanged
Relief for emergency vehicles	Unchanged
Simplification of donor benefits rules for charities	Unchanged
Social Investment Tax Relief review	2.1
Soft Drinks Industry Levy (SDIL): Penalties	1.34
Stamp duty land tax: changes to the filing and payment process	Unchanged
Stamp duty relief for Share Incentive Plans	1.46
Statutory remedy re Advanced Corporation Tax	1.54
VED Zero Emission Taxis	Unchanged
Voluntary tax returns	1.53