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Finance Bill 2020-21: Legislation and consultations announced

Published: 21 Jul 2020 Update History

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:

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:

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.

Following the 2018 consultation, “Amending HMRC’s civil information powers” a consultation outcome and draft legislation has been published for inclusion in Finance Bill 2020-21.

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.

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