The Autumn Statement on 17 November 2022 set out that there would be two Finance Bills: an Autumn Finance Bill, introduced on 22 November 2022, and a Spring Finance Bill in 2023.
The draft Finance Bill 2022-23 had been released for consultation on L-Day (20 July 2022). None of these draft clauses made it into the Autumn Finance Bill. Furthermore, some of the changes announced at the Autumn Statement will be legislated for outside of a Finance Bill.
ICAEW’s Tax Faculty summarises what is in the Autumn Finance Bill, what is expected to follow in the Spring Finance Bill, and how some of the other measures will be given legislative effect.
The Autumn Finance Bill
The Autumn Finance Bill is dominated by clauses to enact some of the changes to rates, allowances and thresholds announced at the Autumn Statement. This includes:
- changes to the energy profits levy: increasing the rate (cl1); reducing the investment allowance (cl2); and extending the end date to 31 March 2028 (cl3);
- changes to the R&D tax relief rates and credit rates for expenditure incurred on or after 1 April 2023 (cl4);
- freezing the income tax personal allowance and basic rate limit until 5 April 2028 (cl5);
- reducing the income tax additional rate threshold to £125,140 from 6 April 2023 and setting it to be twice the amount of the personal allowance plus the amount at which the personal allowance starts to be withdrawn. This threshold will be set annually by Treasury order from the 2028/29 tax year onwards (cl6);
- reducing the dividend allowance to £1,000 from 6 April 2023 and to £500 from 6 April 2024 onwards (cl7);
- reducing the capital gains tax (CGT) annual exempt amount to £6,000 from 6 April 2023 and to £3,000 from 6 April 2024 onwards, removing the requirement to uprate the allowance annually in line with CPI inflation and fixing the CGT proceeds reporting limit at £50,000 from 6 April 2023 (cl8);
- freezing the inheritance tax nil rate band, residence nil rate band (RNRB) and RNRB taper threshold until 5 April 2028 (cl9);
- introducing vehicle excise duty on electric vehicles from 1 April 2025 (cl10); and
- setting company car tax rates from 6 April 2025 to 5 April 2028 (cl11).
How will other Autumn Statement announcements be enacted?
Not all the changes to rates, allowances and thresholds announced at the Autumn Statement require a Finance Bill.
For example, changes and freezes to national insurance thresholds and the class 2 and class 3 rates for 2023/24 will be legislated for in affirmative secondary legislation in early 2023.
The Stamp Duty Land Tax (Reduction) Bill to enact the changes to stamp duty land tax thresholds announced in September’s mini-Budget was already making its way through Parliament. On 28 November, an amendment paper was submitted to make various changes to this bill to ensure that it has a temporary effect from 23 September 2022 until 31 March 2025. This includes an amendment to change the short title of the bill to the Stamp Duty Land Tax (Temporary Relief) Bill.
No legislation is required to freeze the VAT registration threshold for a further two years. A Treasury order is only required if the registration limits are changed.
The Autumn Statement also confirmed that the married couple’s allowance, the blind person’s allowance, and the annual tax on enveloped dwellings would be uprated by the September CPI figure of 10.1% for the 2023/24 tax year. These increases will be implemented in the usual way through a Treasury Order.
Finally, the Autumn Statement indicated that the car and van fuel benefit charges and van benefit charge will increase in line with CPI from 6 April 2023. The government will legislate by way of regulations in December 2022.
Spring Finance Bill
The Autumn Statement announced some new measures to be included in the Spring Finance Bill and confirmed some measures that had already been announced and made changes to others.
Autumn Statement announcements to be included in the Spring Finance Bill
The new measures announced at the Autumn Statement to be legislated for the in the Spring Finance Bill include:
- a rule to deem shares and securities in a non-UK company received in exchange for share or securities in a UK company to be located in the UK for tax purposes from 17 November 2022;
- changes to the energy profits levy relating to decarbonisation expenditure;
- introducing an electricity generator levy from 1 January 2023;
- extending the first-year allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes; and
- setting the climate change levy rates for 2024/25.
Measures previously announced and confirmed for inclusion in the Spring Finance Bill 2023
The Autumn Statement confirmed that several measures released for consultation on L-Day will be included in the Spring Finance Bill, although some will be amended following consultation.
This includes the reforms to R&D tax relief. This will expand qualifying expenditure to include data and cloud costs, and refocus support towards innovation in the UK. The reforms also aim to target abuse and improve compliance.
The statement also confirmed that legislation to implement the OECD’s pillar 2 rules for a global minimum rate of tax of 15%, for accounting periods beginning on or after 31 December 2023, will be included in the Spring Finance Bill. The clauses released for consultation on L-Day related to the implementation of an income inclusion rule.
However, the Autumn Statement also confirmed that the UK will implement a qualified domestic minimum top-up tax (QDMTT). The QDMMT will require large groups, including those operating exclusively in the UK, to pay a top-up tax where their UK operations have an effective tax rate of less than 15%.
The Autumn Statement confirmed that the Spring Finance Bill will include legislation requiring large multinational businesses operating in the UK to keep and retain transfer pricing documentation in a prescribed and standardised format, set out in the OECD’s Transfer Pricing Guidelines (Master File and Local File).
The draft legislation released on L-Day also included a requirement to complete a summary audit trail, which is a short questionnaire detailing the main actions undertaken in preparing the local file. The Autumn Statement indicates that the government will continue to consult on the summary audit trail requirement.
The Autumn Statement also announced a delay to the start date for the expansion of ‘tax conditionality’ to Scotland and Northern Ireland. This makes the renewal of certain licences conditional on the performance of tax checks. The draft legislation released on L-Day indicated this would apply from 1 April 2023. The Autumn Statement announced that this will be delayed until 1 October 2023 to allow licensing bodies and licence holders additional time to prepare.
Although it was not mentioned in the Autumn Statement, a news story on the same day confirmed that the Office of Tax Simplification will formally close when the Spring Finance Bill receives Royal Assent.
Draft Finance Bill 2022-23
There remain numerous measures where draft legislation was released on L-Day or subsequently that were not mentioned in the Autumn Statement. These include:
- Low earners anomaly: pensions relief relating to net pay arrangements
- Pension schemes: amendment to taxation of collective money purchase schemes
- Amendments to the Qualifying Asset Holding Companies regime
- Double Taxation Relief claims
- Capital Gains Tax: transfers of assets between spouses and civil partners in the process of separating
- Capital Gains Tax: disposals of land and residences for limited liability partnerships and Scottish partnerships
- Pension assets: further tax provisions for Income Tax and Inheritance Tax in connection with the Dormant Assets Scheme
- Air Passenger Duty: banding reforms from April 2023
- Improving the administration and operation of Insurance Premium Tax
- Aerodromes: approval requirements
- Aggregates Levy: changes to exemptions
- Soft Drinks Industry Levy: concentrates mixed with added sugar when dispensed
- Homes for Ukraine Sponsorship Scheme: tax exemptions and reliefs
- Lump Sum Exit Scheme: taxation of payments
- Reform of Alcohol Duty rates and reliefs
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