Finance Bill (No.2) 2023 Public Bill Committee preview

Amendment papers and other publications relevant to the Bill can be downloaded here.

The CIOT/ATT External Relations Team will be liveblogging on the CIOT website throughout committee stage.

Public Bill Committee - background

Public bill committee is the stage where the bill is debated and agreed clause by clause by a committee of MPs. Amendments and new clauses can be tabled by any MP on the committee but, in the absence of an amendment of the law resolution, the scope for amendments is strictly limited to what is authorized by the specific resolutions on which the bill is founded. (More detail on this in this House of Commons Library paper if you are interested.)

The committee hearings are scheduled as follows:

• Tuesday 16 May – sessions 1 and 2 (morning and afternoon session)
• Thursday 18 May – sessions 3 and 4 (morning and afternoon session)
• Tuesday 23 May - sessions 5 and 6 (morning and afternoon session)

Not all sessions may be needed.

The following MPs have been appointed to the committee (backbenchers unless indicated):

Conservatives: Victoria Atkins (Financial Secretary), Simon Baynes, Gareth Davies (Exchequer Secretary), Anthony Mangnall, Rt Hon Andrew Stephenson (Government Whip), Matt Vickers, Shaun Bailey, Aaron Bell, Rob Butler, Peter Gibson, Mark Jenkinson, Robbie Moore, Rt Hon Kelly Tolhurst and Rt Hon Craig Whittaker.

Labour: Dame Angela Eagle, Emma Hardy, James Murray (Shadow Financial Secretary), Liz Twist (Opposition Whip), Ashley Dalton, Samantha Dixon, Abena Oppong-Asare (Shadow Exchequer Secretary) and Rt Hon Valerie Vaz.

SNP: Kirsty Blackman (SNP lead on the Bill) and Douglas Chapman.

MPs will proceed through the clauses in numerical order (unless a programming motion dictates otherwise, which is rare), excluding the clauses which have already been debated (and agreed) in Committee of Whole House. These will typically be the most controversial clauses, selected by the opposition for debate on the floor of the Commons chamber. Schedules are debated and voted on with the clauses to which they relate. Amendments are debated and voted on with the clauses to which they relate. New clauses may be debated with a clause to which they relate, or, if they do not relate closely enough to any existing clause, at the end of the committee stage. Regardless of when they are debated new clauses will be voted on at the end of the committee stage.

CIOT, our Low Incomes Tax Reform Group (LITRG) and our sister body the Association of Taxation Technicians (ATT) have made a number of representations to the committee on some of the clauses covered in this briefing, but unfortunately we are asked by Parliament not to publish them until they have been accepted by the committee (ie on Tuesday 16 May).

Part 1 – Income tax, corporation tax and capital gains tax

Income tax charge, rates etc

Clause 1 - Income tax charge for tax year 2023-24

Annual measure allowing government to collect income tax for the next 12 months. (Yes, income tax is still a theoretically temporary measure requiring annual renewal.)

Clause 2 - Main rates of income tax for tax year 2023-24

Sets income tax rates for non-savings, non-dividend income for 2023-24 for England and Northern Ireland at 20%, 40% and 45% (ie no change). Rates are reduced by 10% for Welsh taxpayers and Welsh Parliament adds Welsh rates on top. Scottish Parliament sets Scottish rates.

Clause 3 - Default and savings rates of income tax for tax year 2023-24

Sets ‘savings rates’ which will apply to savings income of all UK taxpayers and the ‘default rates’ which apply to non-savings, non-dividend income of taxpayers who are not subject to the main rates of income tax, Welsh rates of income tax or the Scottish rates of income tax. Both stay at 20%/40%/45%.

Clause 4 - Freezing starting rate limit for savings for tax year 2023-24

Starting rate limit for savings unchanged at £5,000. This is a zero rate on income from savings, but is only available to people on low incomes. If your earnings from non-savings income are over your personal allowance (usually £12,570) plus the starting rate limit (i.e. over £17,570 for most people) you can’t get this.

Remember, the first Finance Act of 2021 froze the income tax personal allowance (the amount that can be earned tax free) at £12,570 and the basic rate limit (the amount of earnings above the personal allowance on which income tax is payable at the basic rate) at £37,700 until 2026.)

Corporation tax charge and rates

[Clause 5 - Corporation tax charge and main rate for financial year 2024 – was agreed in Committee of Whole House]

[Clause 6 - Standard small profits rate and fraction for financial year 2024 - was agreed in Committee of Whole House]

Capital allowances

[Clause 7 - Temporary full expensing etc for expenditure on plant or machinery - was agreed in Committee of Whole House]

[Clause 8 - Annual investment allowance to remain at £1m beyond temporary period - was agreed in Committee of Whole House]

[Clause 9 - First-year allowance for expenditure on electric vehicle charge points - was agreed in Committee of Whole House]

Other reliefs relating to businesses 

[Clause 10 - Relief for research and development (and schedule 1) - was agreed in Committee of Whole House]

[Clause 11 - Treatment of profits from patents etc: small profits rate of corporation tax - was agreed in Committee of Whole House]

[Clause 12 - Energy (oil and gas) profits levy: De-carbonisation allowance - was agreed in Committee of Whole House]

[Clause 13 – Museums and galleries exhibition tax relief (MGETR): extension of sunset date - was agreed in Committee of Whole House]

[Clause 14 – Extension of the temporary increase in theatre tax credit etc - was agreed in Committee of Whole House]

[Clause 15 - Seed enterprise investment scheme: increase of limits etc - was agreed in Committee of Whole House]

Reliefs for employees 

Clause 16 - Company share option plan (CSOP) schemes: share value limit and share class

Changes to the CSOP rules. Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit. The ‘worth having’ restriction on share classes within CSOP will be removed, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies. The changes will take effect from 6 April 2023. More

Clause 17 - Enterprise management incentives: restricted shares and declarations

The government is simplifying the process to grant options under an EMI scheme. From April 2023, the requirement for a company to set out details of share restrictions within the option agreement and the requirement for a company to declare an employee has signed a working time declaration will be removed. From April 2024, the government will extend the deadline for a company to notify HMRC of the grant of an EMI option from 92 days following grant, to the 6 July following the end of the tax year. More

Pensions

[Clause 18 - Lifetime allowance charge abolished - was agreed in Committee of Whole House]

[Clause 19 - Certain lump sums to be taxed at marginal rate - was agreed in Committee of Whole House]

[Clause 20 - Annual allowance increased - was agreed in Committee of Whole House]

[Clause 21 - Money purchase annual allowance - was agreed in Committee of Whole House]

[Clause 22 - Annual allowance: tapering - was agreed in Committee of Whole House]

[Clause 23 - Modification of certain existing transitional protections - was agreed in Committee of Whole House]

[Clause 24 - Collective money purchase (CMP) arrangements - was agreed in Committee of Whole House]

[Clause 25 - Relief relating to net pay arrangements - was agreed in Committee of Whole House]

Social security

Clause 26 - Payments under Jobs Growth Wales Plus

Exempt payments of the training allowance under the Welsh Government’s Jobs Growth Wales Plus scheme from income tax, with retrospective effect from 1 April 2022. More

[Clause 27 - Power to clarify tax treatment of devolved social security payments - was agreed in Committee of Whole House]

Foster carers etc

Clause 28 - Qualifying care relief

Increases the amount of income tax relief available for foster carers and shared lives carers using Qualifying Care Relief. The changes will take effect for tax year 2023 to 2024: The annual fixed amount will increase from £10,000 to £18,140. The weekly amount for children under 11 will increase from £200 to £375. The weekly amount for children 11 or older and adults will increase from £250 to £450. Amounts will thereafter be increased by CPI annually. More

Estates in administration and trust

Clause 29 - Estates in administration and trusts (and schedule 2)

Simplifies how income tax applies to trusts, estates and their beneficiaries, with effect from 6 April 2024:

• Provides that trusts and estates with income up to £500 do not pay tax on that income as it arises
• Removes the default basic rate and dividend ordinary rate of tax that applies to the first £1,000 slice of discretionary trust income
• Provides that beneficiaries of UK estates do not pay tax on income distributed to them that is within the £500 limit for the personal representatives
• Makes technical amendments to ensure for beneficiaries of estates that their tax credits and savings allowance continue to operate correctly More

Separately, HMRC intend to make changes to IHT regs during 2023-24 to remove some non-taxpaying trusts from reporting requirements.

There is one proposed amendment to schedule 2. Government amendment 4 would mean that a pensions settlement could not be a “qualifying settlement” for the purpose of section 24B of the Income Tax Act 2007 (being inserted by the Bill) or a “relevant settlement” in respect of which the conditions in subsection (9) of that section could be met.

Provisions relating to insurance

Clause 30 - Transfer of basic life assurance and general annuity business

Legislation to address the risk of a tax mismatch in the life insurance rules where re-insurance precedes a transfer of Basic Life Assurance and General Annuity Business (BLAGAB). Has effect from 15 Dec 2022. More

Clause 31 - Certain re-insurance sums not to count as deemed I-E receipts

Addresses an industry concern that the scope of an existing rule may be unnecessarily wide and is blocking commercial transactions. More

Clause 32 - Insurers in difficulties: write-down orders for corporation tax purposes

Legislation to address the corporation tax consequences of write-downs of liabilities of insurers in financial distress, and any subsequent court-ordered variation or termination of those write down-orders. Takes effect at Royal Assent. More

Clause 33 - Insurers in difficulties: write-down orders in case of pension schemes

Legislation to address the pensions tax consequences of write-downs of liabilities of insurers in financial distress, and any subsequent court-ordered variation or termination of those write down-orders. Takes effect at Royal Assent. More

Miscellaneous corporation tax matters

Clause 34 - Corporate interest restriction (CIR) (and schedule 3)

CIR rules restrict the ability of large businesses to reduce their taxable profits through excessive UK interest expense. This measure makes 21 separate revisions to the rules – some to protect the Exchequer, some to reduce unfair outcomes or high administrative burdens. More

These include:

• Ensuring that groups can carry forward interest allowance where a new holding company is inserted in the group part way through a period of account;
• Extending the time limit by 12 months for HMRC to appoint a reporting company;
• Revising worldwide debt cap rules so that where a revised statement of allocated disallowances is submitted this will only be treated as valid where a valid revised statement of allocated exemptions is also submitted. 

There is one proposed amendment to schedule 3. Government amendment 5 would mean that companies count as insurance companies for the purpose of the corporate interest restriction rules if they effect or carry out contracts of insurance and have regulatory permission to do so under a foreign law which is similar to or corresponds to the relevant United Kingdom law.

Clause 35 - Investment vehicles (and schedule 4)

This clause and schedule update the rules governing the tax treatment of certain investment vehicles.

Part 1 of the schedule amends the Genuine Diversity of Ownership (GDO) condition in the Qualifying Asset Holding Companies (QAHC), Real Estate Investment Trusts (REIT) and Non-Resident Chargeable Gains (NRCG) rules. The GDO condition is intended to prevent funds that are only open to a small number of predetermined investors from benefitting from those regimes. The changes will improve the operation of the GDO condition for fund structures involving multiple pooling vehicles. More

Part 2 of the schedule relaxes the requirement for a REIT to own at least three properties where a REIT owns at least one commercial property worth £20 million or more; and amends the rule for disposals of property within three years of significant development work to ensure that this rule operates in line with its original intention and is not compromised by the effects of inflation. More

Part 3 of the schedule amends QAHC rules so that the conditions that must be met by a company to qualify as a QAHC better align with the intended scope of the regime and the rules better achieve their intended effect. More

International matters

Clause 36 - Share exchanges involving non-UK incorporated close companies

Anti-avoidance measure. Shares and securities in a non-UK company acquired in exchange for securities in a UK close company will be deemed to be located in the UK. More

Clause 37 -  Records relating to transfer pricing (and schedule 5)

Legislation to require businesses operating in the UK, which are part of a large multinational enterprise (global revenues of €750 million or more), to prepare transfer pricing documentation, namely a master file and local file, in accordance with OECD transfer pricing guidelines. (In addition, HMRC will continue to consult on the introduction of a Summary Audit Trail, which would be a document detailing the steps undertaken by a UK business in preparing its transfer pricing documentation.) More

Clause 38 - Double taxation relief: foreign nominal rates 

Limits certain extended time limit claims for double tax relief calculated by reference to the foreign nominal rate of tax. This measure took effect from the date of announcement on 20 July 2022. The measure is only relevant to foreign distributions received by UK companies before the introduction of distribution exemption in 2009. More

Chargeable gains 

Clause 39 - Payments to farmers under the lump sum exit scheme etc 

This measure applies to those leaving or retiring from farming and who have applied for a payment under the Lump Sum Exit Scheme.

It clarifies that the payment, and any interim payment received, will be treated as a capital receipt provided you meet the scheme’s eligibility criteria. If you do not meet the eligibility criteria the payment will be treated as income. More

Clause 40 - Contracts completed after ordinary notification period 

Anti- avoidance. This measure ensures that HMRC does not have little or no time in which to assess tax due, or taxpayers to claim allowable losses, where there is a delay between an unconditional contract being entered into and an asset being conveyed or transferred. More

Clause 41 - Separated spouses and civil partners

Changes the rules that apply to transfers of assets between spouses and civil partners in the process of separating. It proposes that separating spouses or civil partners be given up to 3 years, after the year they cease to live together, to make no gain or no loss transfers of assets; and unlimited time when the assets are the subject of a formal divorce agreement. More

The Government has tabled two amendments to clause 41. Amendment 6 ensures that the inserted subsection (1C) applies to disposals made on the days mentioned in paragraphs (a) and (b) of that subsection as well as before those days. (This follows representations made by CIOT on this matter.) Amendment 7 clarifies that the inserted subsection (1D) applies in relation to disposals made after A and B have ceased to be married or civil partners.

Clause 42 - Carried interest: election to pay tax as scheme profits arise

Introduces a new elective accruals basis of taxation for carried interest. This will allow UK resident investment managers to accelerate their tax liabilities in order to align their timing with the position in other jurisdictions, where they may obtain double taxation relief. Applies from 6 April 2022. More

The Government has tabled an amendment to clause 42. Amendment 8 secures that the amount of carried interest that is presumed to arise in the hypothetical situation that determines the amount of the charge properly reflects prior distributions to investors.

Clause 43 -  Relief on disposal of joint interests in land 

Amends legislation for CGT roll-over relief and private residence relief to ensure that LLPs and Scottish partnerships which hold title to land can access the relief. This is for consistency and fairness, say the government. More

Part 2 – Alcohol Duty

Clauses 44-46, 49, 61-120 - Alcohol duty (and schedules 6, 10-13)

Legislation to make changes to the duty structure for alcoholic products, moving from individual product-specific duties and bands to a single duty on all alcoholic products and a standardised series of tax bands based on alcoholic strength. 

Chapter 2 introduces a new Draught Relief applying to alcoholic products under 8.5% ABV intended to be sold ‘on draught’.

Chapter 3 introduces a new Small Producer Relief (replacing Small Brewers’ Relief) for those making less than 4,500 hectolitres of alcohol per year, which will apply only to alcoholic products under 8.5% ABV.

The legislation also sets out other reliefs and exemptions such as for production for personal consumption, and transitional arrangements for certain wine products. Takes effect 1 August 2023. 

Duty rates on all alcoholic products produced in, or imported into, the UK will increase in line with RPI in August. 

However, to support pubs, Draught Relief will rise from 5% to 9.2% for qualifying beer and cider products, and from 20% to 23% for qualifying wine, spirits based and other fermented products.  More

HMRC will also take forward plans to modernise the approval, return and payment processes for domestic producers of alcohol products. These are scheduled to take effect from late 2024 with the introduction of a new digital system.

[The following clauses were agreed in Committee of Whole House: clauses 47-48 and schedule 7 (alcohol duty: charge and rates); clauses 50-53 and schedule 8 (alcohol duty: draught relief); clauses 54-60 and schedule 9 (alcohol duty: small producer relief main provisions)]

Part 3 – Multinational Top-up Tax

[Clauses 121-264 and schedules 14-17 - Multinational top-up tax – were agreed in Committee of Whole House]

Part 4 – Domestic Top-up Tax

[Clauses 265-277 and schedules 17-18 - Domestic top-up tax – were agreed in Committee of Whole House]

Part 5 – Electricity Generator Levy

[Clauses 278-312 - Electricity Generator Levy – were agreed in Committee of Whole House]

Part 6 – Other Taxes

Stamp duty land tax

Clause 313 - Transaction funded with the assistance of a subsidy

Amends the SDLT Registered Social Landlord exemption to ensure that purchases made with the assistance of section 31 LGA 2003 funding to secure additional social housing stock are not subject to SDLT. This follows the granting of an additional £500m of funding for local authorities to help secure housing stock for those fleeing conflict (especially from Ukraine). More

Value added tax 

Clause 314 - Deposit schemes

Simplifications to the VAT treatment of deposits charged under a drink container deposit return scheme (DRS). (NB. The government plans to introduce a DRS for bottled and canned drinks. This will require sellers of drinks to add a returnable deposit to the price of in-scope products sold in the UK.) More

Import Duty

Clause 315 - Dumping, subsidisation and safeguarding remedies (and schedules 19-20)

Changes to trade remedies legislation to strengthen ministers’ powers.

Schedule 19 will require the Trade Remedies Authority (TRA) to give the Business and Trade Secretary notice at certain points in dumping, subsidisation and safeguarding investigations. It will provide ministers with the power to ask the TRA to reassess recommendations or determinations before ministers make a decision, allow the TRA to provide options within its recommendations, allow ministers the power to revoke trade remedies measures without a TRA recommendation and for ministers to apply alternative provision and final remedies to that recommended by the TRA. 

Schedule 19 also includes legislation to provide powers for the Business Secretary to make secondary legislation relating to the repayment or collection of duties following a review of a trade remedies measure. This will allow for the reimbursement or collection of monies under the trade remedies framework in certain circumstances.

Schedule 20 sets out the role of the TRA and the government in investigating and implementing bilateral safeguard measures which the UK has agreed with our Free Trade Agreement partners. The provisions will enable ministers to direct the TRA to open an investigation.

Clause 316 - Rulings as to methods of valuation of goods 

Enables introduction of Advance Valuation Rulings. These are written decisions made by customs authorities at the request of a trader that are legally binding on both parties. They are a trade facilitation and are not mandatory. These rulings will provide traders with certainty on the valuation method that determines the customs value of goods they are importing into the UK. This will provide reassurance that the valuation method is correct and will assist in the completion of customs declarations. More

Clause 317 - Discharging goods from free circulation procedure subject to guarantee

Enables traders to request a review of, or appeal against, a decision by HMRC to require a financial guarantee as a condition of releasing imported goods from customs control in circumstances where the amount of duty due is not clear when a customs declaration is accepted by HMRC. The legislation will also bring provisions relating to these guarantees within the framework of legislation covering other forms of customs guarantee. More

Fuel Duties

Clause 318 - Excepted machines

Changes to restrictions on entitlement to use rebated diesel and rebated biofuels, to permit the use of rebated fuel in tractors and gear used by charities for launching lifeboats and in machines used for arboriculture, and extend entitlement to use rebated fuel to machines used primarily for providing heat and electricity for non-commercial premises. Took effect 15 March 2023. More

The clause also makes a minor technical correction. Section 14B(6) of the Hydrocarbon Oil Duties Act 1979 (HODA) cross refers to a definition in another section of HODA which has been repealed and so a definition needs to be inserted. More

Tobacco Products Duty

Clause 319 - Rates of tobacco products duty 

Increase the duty rates for all tobacco products by the tobacco duty escalator of 2% above RPI inflation. Increase the rate for hand-rolling tobacco by an additional 4% above the escalator. Increase the Minimum Excise Tax by an additional 1% above the escalator. Took effect 15 Mar 2023. More

Soft Drinks Industry Levy

Clause 320 - Flavour concentrates (and schedule 21)

Amends the definition of a soft drink liable to the Soft Drinks Industry Levy to include concentrates which are mixed with sugar when dispensed. More

Air Passenger Duty

Clause 321 - Rates and bands

Introduction, with effect from 1 April 2023, of a new domestic band and ultra long-haul band for the purposes of air passenger duty and for changes to the rates of the duty and to the list of territories. More

Clause 322 - Northern Ireland rates

Makes consequential amendments to the provisions that devolved to the Northern Ireland Assembly the power to set direct long-haul rates of APD. These amendments update the provisions to reflect the introduction by clause 321 of the ultra-long-haul band. 

Vehicle Taxes

Clause 323 - Rates of vehicle excise duty

Increases VED rates for cars, vans and motorcycles in line with RPI with effect from 1 April 2023. To support the haulage sector, VED for Heavy Goods Vehicles (HGVs) will remain frozen for 2023-24. More

Clause 324 - Reform of HGV road user levy (and schedule 22)

Reforms the HGV road user levy, with effect from 1 August 2023, following the end of the levy suspension period. The reforms take into account the environmental performance of the vehicle. For foreign-registered vehicles, the reforms also ensure that the levy is focused on road usage and is more clearly aligned with the government’s international obligations. More

There are two proposed amendments to clause 324 and schedule 22. Government amendments 9 and 10 would make consequential amendments to ensure that vehicle excise duty remains chargeable on certain HGVs on the same basis, and in the same amounts, as it is chargeable before the amendment to the HGV road user levy in the Bill have effect.

Clause 325 - End of exempt period for HGV road user levy

Removes certain circumstances in which the levy suspension period for a given HGV is extended longer than the government intended. In the final year of the three-year levy suspension period, each vehicle should only benefit from up to 12 months of levy free period. The clause ensures that this is the case by providing for a transitional payment where a vehicle has benefited from additional months of levy free period.

Environmental Taxes

Clause 326 - Rates of landfill tax

Increases the standard and lower rates of Landfill Tax in line with RPI, rounded to the nearest 5p. More

Clause 327 - Rates of climate change levy 

Increases the main rates of CCL for gas and solid fuels. The gas rate will be aligned with that for electricity and the rate for solid fuels will increase proportionally to the gas rate increase. The CCL main rates on electricity and liquefied petroleum gas (LPG) will continue to be frozen for 2024-25. Also adjusts the reduced rates of CCL on gas and solid fuels for qualifying businesses in the Climate Change Agreement scheme. These businesses will pay no more tax on these fuels than had the main rates for these fuels been increased by the RPI. The reduced rates on electricity and LPG will be frozen at 2023-24 levels in 2024-25. More

Clause 328 - Rate of plastic packaging tax 

Increases rates of plastic packaging tax in line with CPI with effect from 1 April 2023.

Clause 329 - Aggregates levy: exemptions and exploitation 

Reforms exemptions affecting aggregate (rock, sand and gravel) extracted during construction works. It will tax previously untaxed aggregate extracted for use on construction sites, and also simplify and extend exemptions for by-product aggregate arising unavoidably from construction projects. Takes effect 1 Oct 2023. More

Part 7 - Miscellaneous and Final

Freeports and investment zones

Clause 330 - Designation of sites (and schedule 23)

The government will establish 12 Investment Zones across the UK. Building on Freeports legislation, this part of the Bill will allow designation of special tax sites in or connected with Investment Zones. Special tax sites will be subject to approval by the government and will be designated using secondary legislation. Once designated, special tax sites will benefit from a package of tax reliefs:

For sites in England, SDLT relief will be made available for purchases of land or buildings, subject to that property being acquired for qualifying commercial purposes and used for such purposes in a control period of up to 3 years.

Enhanced capital allowances of 100% will be made available for companies incurring qualifying expenditure on new plant and machinery primarily for use in a special tax site.

An enhanced rate of structures and buildings allowances of 10% per year for 10 years for qualifying expenditure on non-residential structures and buildings in special tax sites. 

Secondary Class 1 NICs relief for employers with physical premises in a special tax site on the earnings of new employees who spend 60% or more of their working time within the sites. This rate can be applied on the earnings of all new hires up to £25,000 per year for up to 3 years. More

Clause 331 - Sunset date for reliefs

Makes provision relating to the sunset date for the tax reliefs available in special tax sites.

Administration

Clause 332 - Rights to repayment of income tax to be inalienable

This measure removes a taxpayer’s ability to legally assign to a third party their income tax repayment, or their right to an income tax repayment. The effect of this measure is that assignments of income tax repayments will have no legal effect and the repayment will remain the property of the taxpayer. More

Clause 333 - Late payment interest on value added tax

When HMRC makes an assessment to recover money, because HMRC has made a payment or repayment to a taxpayer which is too high, late payment interest will be charged from the date HMRC made the original payment. Currently, the interest is charged 30 days after the date of the assessment.

Additionally, for customers who use the VAT Annual Accounting Scheme, late payment interest and late payment penalties will not be charged on instalments that are paid late. Late payment interest and late payment penalties will still apply to any balancing payment that is not paid on time. More

Clause 334 - Penalties for failure to pay value added tax 

Relates to penalties for failure to pay instalments of VAT payable under the annual accounting scheme (see above). More

Clause 335 - VAT credits: repayment interest due where evidence not provided 

Removes certain provisions in Finance Act 2009 relating to repayment interest on VAT credits, which were not commenced. More

Clause 336 - Insurance premium tax: power to make regulations about notifications 

Broadens existing powers to allow HMRC to move IPT forms from secondary legislation and into a public notice by way of a Statutory Instrument. This will make it easier to make administrative updates to the forms and will help facilitate digitisation of IPT forms. More

Clause 337 - Penalties for failure to make payments of plastic packaging tax on time 

Amends penalty rules for late payment of Plastic Packaging Tax to ensure that all late payments are treated consistently. More

Management of Customs and Excise

Clause 338 - Approval of aerodromes 

Establishes a new approval and enforcement regime for aerodromes which handle international movements of people and goods. Specifically, it will (a) put in place a process for HMRC to grant, amend and revoke approval governing the movement of people and goods through aerodromes that are not C&E airports; (b) require affected aerodromes to be approved and take responsibility for complying with their terms of approval. More

Clause 339 - Approved aerodromes: minor and consequential amendments

Consequential amendments following the provisions concerning regulated aerodrome approvals introduced by clause 338.

Clause 340 - Temporary approvals 

Amends legislation which allows businesses to continue trading during a review or appeal period where their excise approval has been revoked by HMRC. The amendment will extend businesses’ ability to trade for a short period where they are unsuccessful in overturning HMRC’s decision. This is so businesses can legally dispose of stock without incurring a penalty. More

Conditionality

Clause 341 - Licensing authorities (requirements to give or obtain tax information) 

Makes the renewal of certain licences in Scotland and Northern Ireland conditional on applicants completing checks that confirm they are appropriately registered for tax. In Scotland, this will apply to licences to drive taxis and private hire cars, operate from booking offices, and operate as a metal dealer. In Northern Ireland, this will apply to licences to drive taxis. This extends existing reforms that have applied to taxi, private hire vehicle, and scrap metal licensing in England and Wales since April 2022. More

Clause 342 - Section 341: consequential amendments

Makes amendments to the Civic Government (Scotland) Act 1982, consequential upon the previous clause.

Charities and community amateur sports clubs

Clause 343 - Definition of “charity” restricted to UK charities 

Restricts charitable tax reliefs and exemptions to UK charities with effect from 15 March 2023. The taxes affected are income tax, Capital Gains Tax, corporation tax, inheritance tax, Stamp Duty, SDLT, Stamp Duty Reserve Tax, Annual Tax on Enveloped Dwellings (ATED) and Diverted Profits Tax. Non-UK charities and CASCs that HMRC has accepted qualify for charity tax reliefs will have a transitional period until April 2024. More

Clause 344 - Definition of “community amateur sports club” restricted to UK clubs

Restricts charitable tax reliefs and exemptions to UK CASCs. More

Homes for Ukraine Sponsorship Scheme

Clause 345 - Exemptions from tax (and schedule 24)

Exempts ‘thank you’ payments made by local authorities to sponsors under the Homes for Ukraine Sponsorship scheme from income tax and corporation tax. More Introduces temporary reliefs from ATED and the 15% rate of SDLT for dwellings made available for occupation by individuals granted entry clearance or permission to stay in the UK under the scheme. More

Office of Tax Simplification

Clause 346 - Abolition of the Office of Tax Simplification 

Abolishes the Office of Tax Simplification. Takes effect at Royal Assent.

Plaid Cymru has proposed amendment 3 to clause 346 which would require the government to present proposals for a Tax Reform Commission, in consultation with the devolved administrations, within six months of this section coming into force. This Commission would “assess the differential impact of the tax system in the UK on different groups of people” and “make recommendations for reform of the tax system”.

The SNP has proposed amendment 2 to this clause which would prevent the Office of Tax Simplification from being abolished unto the Chancellor has replied to outstanding correspondence from the Treasury Committee on the subject (NB. This has since happened), and published a cost/benefit analysis of the policy.

Additionally an amendment and new clause have been tabled by members of the House of Commons Treasury Committee – led by the committee’s chair Harriett Baldwin. Amendment 1 would leave out the clause, thereby retaining the Office of Tax Simplification. New clause 1 would require the Treasury to report annually to the Treasury Committee on tax simplification if the OTS is abolished. These reports would have to include information on steps to simplify existing and new taxes, tax reliefs and allowances, as well as engagement with stakeholders to understand needs for tax simplification, and the development of metrics to measure performance on tax simplification, and performance against them.

Dormant Assets Scheme

Clause 347 - Pension benefits and inheritance tax

The Dormant Assets Scheme enables banks and building societies to channel funds from dormant accounts towards good causes. The govt plans to expand the scheme to include assets from pensions, insurance, investment and wealth management and securities sectors. This measure amends Income Tax and Inheritance Tax legislation to make sure assets transferred to the ‘reclaim fund’ which are subsequently returned, receive the correct tax treatment. More

Other

Clause 348 - International arrangements for exchanging information

Consolidates five powers that allow Automatic Exchange of Information (AEOI) regulations to be laid. (AEOI regulations enable the automatic exchange of tax information between jurisdictions to support compliance, in line with international agreements.) These powers cover OECD Mandatory Disclosure Rules (MDR), the Common Reporting Standard (CRS), Foreign Account Tax Compliance Act (FATCA), Country by Country Reporting (CbCR) and Reporting Rules for Digital Platforms (DP) regulations. There will also be a technical amendment to the power that allows MDR regulations to be laid so that these regulations work as intended. More

Clause 349 - Payment of unclaimed money in court into the Consolidated Fund 

Enables rules to make provision requiring unclaimed money in court to be paid into the Consolidated Fund.

Clause 350 - Financial sanctions regulations: prohibition on certain payments by HMRC

Clarifies the exercise of HMRC’s functions in relation to Designated Persons (DPs) subject to financial sanctions – that is, HMRC will withhold payments and repayments from DPs subject to financial sanctions and entities that are either owned or controlled by them, that have a UK tax footprint. Also ensures any future changes to UK sanctions legislation concerning DPs subject to financial sanctions are automatically reflected in the exercise of HMRC’s functions. More

Final

Clause 351 - Interpretation

Clause 352 - Short Title

New clauses

A number of further new clauses, not related to any particular clause of the Bill, have also been tabled. These will be considered (if at all – as tablers of new clauses 2 and 3 are not members of the committee) after the committee has debated all the clauses in the Bill.

New clause 2 (Labour backbencher Debbie Abrahams) – Review of public health and poverty effects of Act

This new clause would require the Government to report on the public health and poverty effects of the provisions of the Act

New clause 3 (Liberal Democrat Treasury spokesperson Sarah Olney) – Review of effects of Act on small businesses

This new clause would require the Government to produce an impact assessment of the effects of the Act on small business with particular regard to inflation and cost of energy.

New clause 4 (SNP) – Exiting the European Union

This new clause would require the Chancellor to publish a report on which of the polices contained in the Act could not have been introduced if the UK has remained in the EU

New clause 5 (SNP) – Assessment of impact of the Act on compliance with the climate change target

This new clause would require the Chancellor to publish an assessment of the impact of the Act on the UK government’s ability to meet its duty to achieve Net Zero by 2050 and its obligations under the Paris Agreement.