Tolley Finance Act 2017 Rebecca Benneyworth MBE BSc FCA
Overview
Filleted Finance Act Royal Assent 27 April 2017 Much important content of Finance Bill 2017 removed to allow Bill to clear quickly 63 sections 11 Schedules Second Finance Bill due shortly
Broad overview Rates etc Income tax ss 1 4 CT s 5 (no rate changes) Non VAT indirect taxes ss 17-23 Sugar Levy Part 2 Ss 25 to 61 Schs 8 11 Closing credits ss 62 63 Leaves 12 sections and 7 Schs
Income Tax Measures
Income Tax Overview S6 and Sch 1 on Off payroll working in Public sector Covered in our May webinar Ss 12 to 14 remove all benefits associated with employee shareholder shares with effect from 1 December 2016 5 sundry changes dealt with here 1 major change disguised remuneration changes This will be a separate session Brief outline in this session
Optional Remuneration (Sch 2) This subject changes the tax treatment of salary sacrifice arrangements Except those which are accorded favoured treatment Amends ITEPA 2003 Chapter 2 The benefits code New s 69A describes optional remuneration arrangements: Type A in return for the benefit the employee gives up a right or future right to receive earnings Type B the employee agrees to be provided with the benefit rather than earnings
Salary Sacrifice General approach is to tax the earnings forgone not the normal benefit rules (unless this produces lower value) Specific rules on: Cash vouchers Non cash vouchers Credit tokens Living accommodation Cars, vans, classic cars plus fuel Other benefits
Exemptions Special case exemptions includes advice on pensions Excluded exemptions a list at new s228a ITEPA (5) HGV s, payments in respect of taxable cars & vans Cycles and safety equipment Childcare vouchers, employer provided childcare, other childcare provision Pension contributions, pensions advice Statutory redundancy payments Counselling & other outplacement services Retraining courses
Final Provisions Exemptions in normal benefits rules do not apply unless dealt with on previous slide So the only exemptions that apply are the special exemptions and excluded exemptions Start date 6 April 2017 But there are rules to allow arrangements already in place to continue under the old rules Until the next review or the arrangement expires
Assets made available for private use Assets made available but not transferred Section 8 introduces new s205a into ITEPA S8 controls deductions for periods when asset not available for private use Requiring prohibition of private use at all times in addition to no actual private use New s 205A then details not available for private use and how to compute benefit not in a condition fit for use, or undergoing repair or maintenance
Offshore Pensions Sections 9 and 10, plus Schs 2 and 3 Covers contributions to overseas pension schemes and transfers to overseas pension schemes Sch 2 specifies that FA 2004 applies to non UK schemes where UK relieved contributions have been made, and The annual allowance calculation includes such contributions Investment regulated non UK schemes treated the same as UK schemes
Offshore Pensions Tax End of 90% rule from 2017/18 100% of foreign pension is taxable on UK residents Old superannuation rules in ICTA s 615(3) cease for contributions on or after 6 April 2017 Lump sums foreign service relief ends in 2017/18 for UK residents (Employer financed schemes) Death benefit lump sums taxable when paid to non UK resident in respect of UK resident member Temporary non resident rules extended to cover withdrawals from overseas schemes
Transfers To Overseas Pensions Imposes a new overseas transfer charge of 25% on UK relieved funds transferred to an overseas scheme Joint and several liability for scheme administrator and member Numerous exemptions Watch for test member has been UK resident for any part of the previous 10 years Transfers on or after 9 March 2017, but some applies only from 6 April 2017
Deduction of Tax At Source Section 11 and Sch 5 Bringing additional interest sources within the exemption from deduction of tax at source Open ended investment schemes dividends treated as annual interest Peer to peer lending arrangements through an authorised operator
Employment income through 3rd parties There was to be a major re-vamp of this legislation But much of it has been deferred to the next Finance Bill The measures in this Act tighten up the loan rules To prevent abuses currently being exploited Looking at transfers of old loans Write off by new owner of the loan Remember these provisions? We have the Gateway test And the relevant step
Disguised Remuneration To come: Tax on old loans outstanding pre April 2010 Abuses by the self employed along similar lines Await Finance (No 2) Bill We will do a session on all of it together after the summer
VAT
Only One VAT Change Affects supplies of specially adapted vehicles to disabled persons and charities Essentially limits the zero rating to once every three years Unless previous vehicle destroyed or no longer appropriate to the disabled persons needs
Summary
Next Finance Bill Was due 23 June But that was before Queen s speech was put back Sometime in early July (might just make end of June) Lots on Corporation Tax losses new provisions Will they commence on 1 April 2017 as intended? MTD Nerves in a hung parliament? Will we see softening? HMRC pressing ahead with pilot