Finance Bill 2020-21: Legislation and consultations announced
21 July: The government publishes a selection of draft clauses together with consultations trailed at the Spring Budget. ICAEW’s Tax Faculty provides a roundup of the key tax developments.
The government has published details of draft legislation to be included in Finance Bill 2020-21, together with other tax consultations.
New consultations released following announcement at the Spring Budget
The following documents have been published:
- Consultation on tackling promoters of tax avoidance (deadline 15 September 2020).
- Call for evidence on business rates review (deadline 18 September 2020).
- Consultation on the design of a carbon emissions tax (deadline 29 September 2020).
- Call for evidence on tackling disguised remuneration tax avoidance (deadline 30 September 2020).
- Consultation on national insurance contributions holiday for employers of veterans (deadline 5 October 2020).
- Call for evidence on pensions tax administration (deadline 13 October 2020).
- Call for evidence on modernisation of the stamp taxes on shares framework (deadline 13 October 2020).
- Consultation on whether qualifying R&D tax credit costs should include investments in data and cloud computing (deadline 13 October 2020).
- Consultation on the economic crime levy (deadline 14 October 2020).
Draft legislation released for Finance Bill 2020-21
Draft clauses released on 21 July will be open for consultation until 15 September 2020.
A small number of technical tax changes, some of which were previously announced are to be enacted. These include:
- Changes to termination payments rules and post-employment notice pay calculation to remove unintended outcomes and bring clarity to the current legislation, by making it clear that individuals will not receive less favourable tax treatment depending on their contract or residency.
- Corporate Interest Restriction (CIR) – amendments to clarify the way special provisions apply for real estate investment trusts and this will apply from 21 July 2020. The second amendment ensures that no penalties arise for the late filing of an CIR return where there is a “reasonable excuse” and this applies from 1 April 2017.
- Annual Tax on Enveloped Dwellings (ATED) – this measure introduces a new relief from the ATED for housing co-operatives which own UK residential property valued in excess of £500,000. The measure will come into effect retrospectively from 1 April 2020, allowing eligible housing co-operatives to claim a refund for the 2020/21 chargeable period.
- Enterprise Management Incentive (EMI) share options – to ensure that employers can issue new EMI share options to individuals who have been furloughed, have taken unpaid leave or have had their working hours reduced below EMI’s current statutory working time requirement as a result of COVID-19. This will apply retrospectively from 19 March 2020.
As announced at the Spring Budget, draft legislation has been published covering the following:
- Van benefit charge, amendments regarding zero emission vans.
- Collective money purchase pension schemes.
- Conditionality: hidden economy, including tax checks on license renewals for certain activities including taxi services and scrap metal activities.
- S4C Section 33 VATA.
Following publication of the summary of responses to the non-UK resident SDLT surcharge consultation, the draft clauses also include new rates of Stamp Duty Land Tax for non-UK residents from 1 April 2021.
Alongside the consultation mentioned above, draft legislation has been published regarding tackling promoters of tax avoidance. This will include tougher measures to challenge those who promote and market tax avoidance schemes, as announced at Spring Budget. Further proposals will be announced in the Autumn to strengthen the government’s response to those who seek to sidestep the rules.
Delays to draft legislation
The consultation periods for the following measures were extended in response to the COVID-19 outbreak:
- plastic packaging tax,
- R&D SME tax credit PAYE cap,
- construction industry scheme abuse, and
- notification of uncertain tax treatment by large businesses.
As a result of this extension, draft legislation for these measures will be published later in the Autumn.