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Finance (No. 2) Act 2024 receives Royal Assent

Author: ICAEW Insights

Published: 28 May 2024

Some of the changes announced at the Spring Budget 2024 have now become law, including an increase in the thresholds for the high income child benefit charge for 2024/25.

Finance No. 2 Bill 2024 (also known as Spring Finance Bill 2024) received Royal Assent on 24 May 2024, becoming Finance (No.2) Act 2024. Royal Assent is the final stage of a bill's passage through Parliament. At that point, the bill becomes law.   

Measures included in Finance (No. 2) Act 2024 

The Finance (No.2) Act 2024 provides for a number of measures announced at the Spring Budget 2024. It: 

  • increases the thresholds for the high income child benefit charge (HICBC) for 2024/25 and subsequent tax years. The lower threshold is increased from £50,000 to £60,000 and the higher threshold from £60,000 to £80,000; 
  • reduces the higher rate of capital gains tax for residential property gains from 28% to 24% with effect for disposals made on or after 6 April 2024; 
  • abolishes multiple dwellings relief for stamp duty land tax (SDLT). This measure applies to land transactions where the effective date falls on or after 1 June 2024, subject to transitional arrangements; and
  • ensures that individuals cannot bypass the transfer of assets abroad (ToAA) anti-avoidance legislation by using a closely-held company to transfer assets offshore. This measure is considered in more detail below. 

For further information, see ICAEW’s dedicated webpage.  

ICAEW’s view on the changes to the ToAA rules 

ICAEW’s Tax Faculty briefed MPs on changes to the ToAA rules (ss714-751, Income Tax Act 2007). The rules are designed to prevent a tax advantage where a UK resident individual transfers an asset to an overseas person while still benefitting from the income from that asset. The changes target the use of a close company, or a company that would be close if it were UK resident, to make the transfer. The government believes that the changes are needed in response to the decision of the Supreme Court in the case of Fisher.   

ICAEW believes that the changes widen the scope of the rules, and make the rules more complicated to apply. This will increase uncertainty for taxpayers and add to HMRC’s workload. For example, the changes apply to all income arising on or after 6 April 2024, rather than transfers that take place on or after that date. This means taxpayers will be required to apply the new legislation to transfers that occurred in the past. Also, the new legislation potentially applies to transactions between subsidiary companies. This will be onerous given that intra-group transactions are common.  

MPs thanked ICAEW for its input.  

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ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

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