The government has published the Finance Bill 2017-18, legislating for tax changes announced by the Chancellor in the Autumn Budget 2017. This bill is the first in the new legislative timetable.
The key areas of focus were clamping down on tax avoidance, supporting businesses and innovation, and tax relief for first time house buyers.
Mel Stride, Financial Secretary to the Treasury, said: “We are backing the innovative businesses that power our economy, helping our young people to get on the property ladder and making our tax system fairer so that we can continue to fund our vital public services.”
The centrepiece of the Budget was a pledge to abolish Stamp Duty Land Tax (SDLT) for first time buyers. The Bill legislated for this, outlining the abolishment of SDLT for those purchasing properties worth up to £300,000 and reducing stamp duty for those buying properties worth up to £500,000.
The Bill also introduced measures aimed at protecting the environment by increasing the amount of Vehicle Excise Duty new diesel cars pay in their first year by one band and increasing existing Company Car Tax diesel supplement by 1%.
Other tax changes include removing the indexation allowance, which the Treasury described as “an outdated relief for inflation which provides benefits to companies that are not available to individuals.”
Tax avoidance
In the wake of the Paradise Papers, the Bill also outlined several measures aimed at clamping down on tax avoidance and evasion, including closing loopholes in the anti-avoidance rules for offshore trusts.
Also introduced were measures specifically tackling improper tax behaviour of companies, such as preventing companies from claiming unfair tax relief on their intellectual property and tackling the use of disguised remuneration. Another measure introduced aims to ensure companies are not able to claim relief for losses on the disposal of shares which do not reflect losses incurred by the wider group.
Furthermore, the Bill targeted online VAT evasion of multinational companies such as Amazon and eBay by pledging to make online marketplaces take more responsibility for the unpaid VAT of their sellers.
Supporting businesses and innovation
To Bill also legislated for several measures outlined by Hammond in the Budget to support businesses. Amongst them is a plan to double the annual amount an Enterprise Investment Scheme (EIS) investor can get tax relief on, to £2m, when investing in knowledge-intensive companies.
The Bill also doubles the amount of money that knowledge-intensive companies can receive annually through EISs and Venture Capital Trusts (VCTs), to £10m.
Another measure increases the rate of R&D Expenditure Credit (RDEC) from 11% to 12%, giving companies more support for research and development.
The Bill also plans to stop tax reliefs being claimed for low-risk investments, thus supporting innovation by re-directing funds towards the UK’s risk-taking growing companies