The government has tabled another large group of amendments (see http://bit.ly/294otRM) to be considered by the Public Bill Committee, beginning on a date yet to be announced. These are listed below in the order in which the Committee will debate the relevant clauses and schedules.
· Clause 5 and Sch 1 (Dividend nil rate and abolition of dividend tax credits etc.) – amendments 127–133:
o Discretionary payments by trustees: amendment 130 ensures that the beneficiaries get a credit for the tax so that the income is only taxed once on the trustees.
o Dividends received by estates in administration: amendments 129, 131 and 133 ensure that credit given to the beneficiary in relation to dividend income distributed by an estate will reflect tax actually paid, and that tax will be repayable where the beneficiary is a non-taxpayer.
o Partnerships: amendment 128 ensures that all partnership dividend income continues to be taxable on a tax year basis, rather than by reference to a partnership accounting period.
· Clause 22 (pension flexibility) – amendment 134: This amendment ensures that if an employer tops up any shortfall in funds in a cash balance arrangement in order to pay an uncrystallised funds lump sum death benefit after the member’s death, the top-up will be an authorised payment to the extent that it does not exceed the shortfall. The change has effect for uncrystallised funds lump sum death benefits paid on the day after Royal Assent to Finance Bill 2016.
· Clause 37 (income-based carried interest) – amendments 43–49: These amendments ensure that the clause operates as intended. The clause introduces a new legislative test to determine when carried interest should be taxed as income or as chargeable gains.
· Clause 40 (deduction of income tax at source: tax avoidance) – amendments 20–21: These amendments ensure that the clause will apply to all payments of royalties in respect of which there is an obligation to deduct income tax at source as a consequence of New Clause 8, which introduces revised definitions to broaden the scope of the UK’s domestic withholding rights over royalties paid abroad.
· Clause 60 (profits from the exploitation of patents etc.) – amendments 50–121: These amendments take account of further comments made on the clause and schedule since publication of the Finance Bill. The clause and schedule revise the patent box rules to implement the ‘nexus approach’, using R&D expenditure as a proxy for substantial activity, in the context of the OECD's BEPS project.
· Clause 82 (inheritance tax: increased nil-rate band) – amendments 13–19: These amendments ensure that the new residence nil-rate band for individuals downsizing or ceasing to own a home will apply in certain specific situations, such as where an individual had more than one interest in a former residence, or the former residence was held in a trust, or where an individual gave away a former residence but continued to live in it and subsequently moved out. The amendments will apply for deaths on or after 6 April 2017.
· Clause 86 (estate duty: objects of national, scientific, historic or artistic interest) – amendments 122–126: These amendments make a number of changes to ensure that the clause operates as intended. This will prevent an unintended dual charge arising when an item is lost, once for the breach of the undertaking to preserve the object and a second charge for the loss itself, and will ensure that the clause applies to objects granted exemptions under Finance Act 1975 provisions.
· Clause 88 (charge to apprenticeship levy) – amendments 22–24: These amendments have the effect of setting out that the value of the annual levy allowance for employers is £15,000, except where it is split by a group of companies or group of charities.
· Clause 90 (apprenticeship levy: connected companies) – amendment 26: This is a technical amendment to clarify that the definition of company applies to the whole of Part 6 of the Bill relating to the apprenticeship levy.
· Clause 90 (apprenticeship levy: connected companies) – amendment 25: This amendment allows companies which are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one company being entitled to the allowance.
· Clause 91 (apprenticeship levy: connected charities) – amendment 27: This amendment allows charities which are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one charity being entitled to this allowance.
· Clause 109 (apprenticeship levy: general interpretation) – amendment 28: This is a technical amendment to clarify that the definition of company in clause 90 applies to the whole of Part 6 of the Bill relating to the apprenticeship levy.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendments 29–39: These amendments remove liability to the higher rates of SDLT for purchasers of dwellings with self-contained annexes or outbuildings that are themselves dwellings (‘granny annexes’), where the annex or outbuilding is the only reason that the higher rates would apply.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendment 40: This amendment has retrospective effect from 1 April 2016 to ensure that the SDLT higher rate will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by individuals, where the purchase would otherwise be exempt from the higher rate.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendments 41–42: These amendments add a new paragraph giving HM Treasury the power to change the rules as to what is a higher rates transaction for the purpose of removing transactions from the higher rates charge.
· New clause 7 (receipts from intellectual property: diverted profits tax): This clause includes within the charge to diverted profits tax an amount equal to payments of royalties and other sums in respect of intellectual property that would have been subject to withholding tax had an avoided permanent establishment been an actual permanent establishment in the UK. These changes ensure that no advantages accrue to a person within the charge to diverted profits tax as a result of other changes to the rules in respect of withholding tax on payments of royalties in the Finance Bill.
· New clause 8 (deduction of income tax at source: intellectual property): This clause broadens the scope of the UK's domestic withholding rights over royalties, introducing a new definition of ‘intellectual property’ in order to ensure that payments abroad are taxed in the UK unless the UK has explicitly given up those taxing rights under a double tax treaty or other international agreement.
· New clause 9 (receipts from intellectual property: territorial scope): This clause broadens the territorial scope of withholding tax on receipts from intellectual property, to include payments made by non-UK resident persons where those payments are connected with a trade carried out by that person through a permanent establishment in the UK.
· New clause 10 (stamp duty: acquisition of target company’s share capital): These amendments to the relief in FA 1986, S 77 will have effect in relation to any instrument executed on or after 29 June 2016.
On 27 and 28 June 2016, a Committee of the Whole House agreed amendments to:
· Clause 7 (taxable benefits: application of Chapters 5 to 7 of Part 3 of ITEPA 2003)
· Clause 14 (travel expenses of workers providing services through intermediaries)
· Schedule 3 (employee share schemes: minor amendments)
· Clause 144 (GAAR: provisional counteractions)
· Clause 145 (GAAR: binding of tax arrangements to lead arrangements)
· Clause 146 (GAAR: penalty)
· Schedule 18 (serial tax avoidance)
· Clause 148 (promoters of tax avoidance schemes)
· Clause 73 (entrepreneurs’ relief: associated disposals)
· Schedule 13 (entrepreneurs’ relief: ‘trading company’ and ‘trading group’)
· Schedule 14 (investors’ relief)
· Clause 77 (employee shareholder shares: limit on exemption)
The following were passed without amendment:
· Clause 8 (cars: appropriate percentage for 2019-20 and subsequent tax years)
· Clause 9 (cars which cannot emit CO2: appropriate percentage for 2017/18 and 2018/19)
· Clause 10 (diesel cars: appropriate percentage)
· Clause 11 (cash equivalent of benefit of a van)
· Clause 12 and Sch 2 (tax treatment of payments from sporting testimonials)
· Clause 13 (exemption for trivial benefits provided by employers)
· Clause 15 (taxable benefits: PAYE)
· Clause 16 (employee share schemes)
· Clause 17 (securities options)
· Clause 18 (employment income provided through third parties)
· Clause 129 (IPT: standard rate)
· Clause 132 (CCL: abolition of exemption for electricity from renewable sources)
· Clause 133 (CCL: main rates from 1 April 2017)
· Clause 134 (CCL: main rates from 1 April 2018)
· Clause 135 (CCL: main rates from 1 April 2019)
· Clause 136 (CCL: reduced rates from 1 April 2019)
· Clause 147 (serial tax avoidance)
· Clause 149 and Sch 19 (Large businesses: tax strategies and sanctions for persistently uncooperative behaviour)
· Clause 150 and Sch 20 (penalties for enablers of offshore tax evasion or non-compliance)
· Clause 151 and Sch 21 (penalties in connection with offshore matters and offshore transfers)
· Clause 152 (offshore tax errors etc: publishing details of deliberate tax defaulters)
· Clause 153 and Sch 22 (asset-based penalties for offshore inaccuracies and failures)
· Clause 154 (offences relating to offshore income, assets and activities)
· Clause 41 (corporation tax: charge for financial year 2017)
· Clause 42 (rate of corporation tax for financial year 2020)
· Clause 43 (Abolition of vaccine research relief)
· Clause 44 (cap on R&D aid)
· Clause 65 (capital allowances: designated assisted areas)
· Clause 66 (capital allowances: anti-avoidance relating to disposals)
· Clause 67 (trade and property business profits: money’s worth)
· Clause 68 (replacement and alteration of tools)
· Clause 69 (property business deductions: replacement of domestic items)
· Clause 70 (property business deductions: wear and tear allowance)
· Clause 71 (transfer pricing: application of OECD principles)
· Clause 72 and Schs 11 and 12 (reduction in rate of capital gains tax)
· Clause 74 (entrepreneurs’ relief: disposal of goodwill)
· Clause 75 (entrepreneurs’ relief: ‘trading company’ and ‘trading group’)
· Clause 76 (investors’ relief)
· Clause 78 (employee shareholder shares: disguised fees and carried interest)
· Clause 79 (disposals of UK residential property by non-residents etc.)
· Clause 80 (NRCGT returns)
· Clause 81 (addition of CGT to Provisional Collection of Taxes Act 1968)
The remainder of the Bill will now go to a Public Bill Committee, to be concluded by 14 July 2016.
The Public Bill Committee will consider the Bill in the following order: cll 1 to 5, Sch 1, cl 6, cl 19, Sch 4, cll 20 to 22, Sch 5, cll 23 to 39, Sch 6, cl 40, cl 45, Sch 7, cll 46 to 50, Sch 8, cll 51 to 60, Sch 9, cll 61 and 62, Sch 10, cll 63 and 64, cl 82, Sch 15, cl 83 to 122, Sch 16, cll 123 to 128, cll 130 and 131, cll 137 to 141, Sch 17, cll 142 and 143, cl 155, Sch 23, cll 156 to 168, Sch 24, cll 169 to 172, Sch 25, cll 173 to 179, new clauses, new Schedules, remaining proceedings on the Bill.
The government has already tabled a number of amendments for the Public Bill Committee.
The government has tabled another large group of amendments (see http://bit.ly/294otRM) to be considered by the Public Bill Committee, beginning on a date yet to be announced. These are listed below in the order in which the Committee will debate the relevant clauses and schedules.
· Clause 5 and Sch 1 (Dividend nil rate and abolition of dividend tax credits etc.) – amendments 127–133:
o Discretionary payments by trustees: amendment 130 ensures that the beneficiaries get a credit for the tax so that the income is only taxed once on the trustees.
o Dividends received by estates in administration: amendments 129, 131 and 133 ensure that credit given to the beneficiary in relation to dividend income distributed by an estate will reflect tax actually paid, and that tax will be repayable where the beneficiary is a non-taxpayer.
o Partnerships: amendment 128 ensures that all partnership dividend income continues to be taxable on a tax year basis, rather than by reference to a partnership accounting period.
· Clause 22 (pension flexibility) – amendment 134: This amendment ensures that if an employer tops up any shortfall in funds in a cash balance arrangement in order to pay an uncrystallised funds lump sum death benefit after the member’s death, the top-up will be an authorised payment to the extent that it does not exceed the shortfall. The change has effect for uncrystallised funds lump sum death benefits paid on the day after Royal Assent to Finance Bill 2016.
· Clause 37 (income-based carried interest) – amendments 43–49: These amendments ensure that the clause operates as intended. The clause introduces a new legislative test to determine when carried interest should be taxed as income or as chargeable gains.
· Clause 40 (deduction of income tax at source: tax avoidance) – amendments 20–21: These amendments ensure that the clause will apply to all payments of royalties in respect of which there is an obligation to deduct income tax at source as a consequence of New Clause 8, which introduces revised definitions to broaden the scope of the UK’s domestic withholding rights over royalties paid abroad.
· Clause 60 (profits from the exploitation of patents etc.) – amendments 50–121: These amendments take account of further comments made on the clause and schedule since publication of the Finance Bill. The clause and schedule revise the patent box rules to implement the ‘nexus approach’, using R&D expenditure as a proxy for substantial activity, in the context of the OECD's BEPS project.
· Clause 82 (inheritance tax: increased nil-rate band) – amendments 13–19: These amendments ensure that the new residence nil-rate band for individuals downsizing or ceasing to own a home will apply in certain specific situations, such as where an individual had more than one interest in a former residence, or the former residence was held in a trust, or where an individual gave away a former residence but continued to live in it and subsequently moved out. The amendments will apply for deaths on or after 6 April 2017.
· Clause 86 (estate duty: objects of national, scientific, historic or artistic interest) – amendments 122–126: These amendments make a number of changes to ensure that the clause operates as intended. This will prevent an unintended dual charge arising when an item is lost, once for the breach of the undertaking to preserve the object and a second charge for the loss itself, and will ensure that the clause applies to objects granted exemptions under Finance Act 1975 provisions.
· Clause 88 (charge to apprenticeship levy) – amendments 22–24: These amendments have the effect of setting out that the value of the annual levy allowance for employers is £15,000, except where it is split by a group of companies or group of charities.
· Clause 90 (apprenticeship levy: connected companies) – amendment 26: This is a technical amendment to clarify that the definition of company applies to the whole of Part 6 of the Bill relating to the apprenticeship levy.
· Clause 90 (apprenticeship levy: connected companies) – amendment 25: This amendment allows companies which are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one company being entitled to the allowance.
· Clause 91 (apprenticeship levy: connected charities) – amendment 27: This amendment allows charities which are connected for the purposes of the apprenticeship levy to share their annual levy allowance of £15,000 between them, instead of only one charity being entitled to this allowance.
· Clause 109 (apprenticeship levy: general interpretation) – amendment 28: This is a technical amendment to clarify that the definition of company in clause 90 applies to the whole of Part 6 of the Bill relating to the apprenticeship levy.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendments 29–39: These amendments remove liability to the higher rates of SDLT for purchasers of dwellings with self-contained annexes or outbuildings that are themselves dwellings (‘granny annexes’), where the annex or outbuilding is the only reason that the higher rates would apply.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendment 40: This amendment has retrospective effect from 1 April 2016 to ensure that the SDLT higher rate will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by individuals, where the purchase would otherwise be exempt from the higher rate.
· Clause 117 (SDLT: higher rates for additional dwellings etc.) – amendments 41–42: These amendments add a new paragraph giving HM Treasury the power to change the rules as to what is a higher rates transaction for the purpose of removing transactions from the higher rates charge.
· New clause 7 (receipts from intellectual property: diverted profits tax): This clause includes within the charge to diverted profits tax an amount equal to payments of royalties and other sums in respect of intellectual property that would have been subject to withholding tax had an avoided permanent establishment been an actual permanent establishment in the UK. These changes ensure that no advantages accrue to a person within the charge to diverted profits tax as a result of other changes to the rules in respect of withholding tax on payments of royalties in the Finance Bill.
· New clause 8 (deduction of income tax at source: intellectual property): This clause broadens the scope of the UK's domestic withholding rights over royalties, introducing a new definition of ‘intellectual property’ in order to ensure that payments abroad are taxed in the UK unless the UK has explicitly given up those taxing rights under a double tax treaty or other international agreement.
· New clause 9 (receipts from intellectual property: territorial scope): This clause broadens the territorial scope of withholding tax on receipts from intellectual property, to include payments made by non-UK resident persons where those payments are connected with a trade carried out by that person through a permanent establishment in the UK.
· New clause 10 (stamp duty: acquisition of target company’s share capital): These amendments to the relief in FA 1986, S 77 will have effect in relation to any instrument executed on or after 29 June 2016.
On 27 and 28 June 2016, a Committee of the Whole House agreed amendments to:
· Clause 7 (taxable benefits: application of Chapters 5 to 7 of Part 3 of ITEPA 2003)
· Clause 14 (travel expenses of workers providing services through intermediaries)
· Schedule 3 (employee share schemes: minor amendments)
· Clause 144 (GAAR: provisional counteractions)
· Clause 145 (GAAR: binding of tax arrangements to lead arrangements)
· Clause 146 (GAAR: penalty)
· Schedule 18 (serial tax avoidance)
· Clause 148 (promoters of tax avoidance schemes)
· Clause 73 (entrepreneurs’ relief: associated disposals)
· Schedule 13 (entrepreneurs’ relief: ‘trading company’ and ‘trading group’)
· Schedule 14 (investors’ relief)
· Clause 77 (employee shareholder shares: limit on exemption)
The following were passed without amendment:
· Clause 8 (cars: appropriate percentage for 2019-20 and subsequent tax years)
· Clause 9 (cars which cannot emit CO2: appropriate percentage for 2017/18 and 2018/19)
· Clause 10 (diesel cars: appropriate percentage)
· Clause 11 (cash equivalent of benefit of a van)
· Clause 12 and Sch 2 (tax treatment of payments from sporting testimonials)
· Clause 13 (exemption for trivial benefits provided by employers)
· Clause 15 (taxable benefits: PAYE)
· Clause 16 (employee share schemes)
· Clause 17 (securities options)
· Clause 18 (employment income provided through third parties)
· Clause 129 (IPT: standard rate)
· Clause 132 (CCL: abolition of exemption for electricity from renewable sources)
· Clause 133 (CCL: main rates from 1 April 2017)
· Clause 134 (CCL: main rates from 1 April 2018)
· Clause 135 (CCL: main rates from 1 April 2019)
· Clause 136 (CCL: reduced rates from 1 April 2019)
· Clause 147 (serial tax avoidance)
· Clause 149 and Sch 19 (Large businesses: tax strategies and sanctions for persistently uncooperative behaviour)
· Clause 150 and Sch 20 (penalties for enablers of offshore tax evasion or non-compliance)
· Clause 151 and Sch 21 (penalties in connection with offshore matters and offshore transfers)
· Clause 152 (offshore tax errors etc: publishing details of deliberate tax defaulters)
· Clause 153 and Sch 22 (asset-based penalties for offshore inaccuracies and failures)
· Clause 154 (offences relating to offshore income, assets and activities)
· Clause 41 (corporation tax: charge for financial year 2017)
· Clause 42 (rate of corporation tax for financial year 2020)
· Clause 43 (Abolition of vaccine research relief)
· Clause 44 (cap on R&D aid)
· Clause 65 (capital allowances: designated assisted areas)
· Clause 66 (capital allowances: anti-avoidance relating to disposals)
· Clause 67 (trade and property business profits: money’s worth)
· Clause 68 (replacement and alteration of tools)
· Clause 69 (property business deductions: replacement of domestic items)
· Clause 70 (property business deductions: wear and tear allowance)
· Clause 71 (transfer pricing: application of OECD principles)
· Clause 72 and Schs 11 and 12 (reduction in rate of capital gains tax)
· Clause 74 (entrepreneurs’ relief: disposal of goodwill)
· Clause 75 (entrepreneurs’ relief: ‘trading company’ and ‘trading group’)
· Clause 76 (investors’ relief)
· Clause 78 (employee shareholder shares: disguised fees and carried interest)
· Clause 79 (disposals of UK residential property by non-residents etc.)
· Clause 80 (NRCGT returns)
· Clause 81 (addition of CGT to Provisional Collection of Taxes Act 1968)
The remainder of the Bill will now go to a Public Bill Committee, to be concluded by 14 July 2016.
The Public Bill Committee will consider the Bill in the following order: cll 1 to 5, Sch 1, cl 6, cl 19, Sch 4, cll 20 to 22, Sch 5, cll 23 to 39, Sch 6, cl 40, cl 45, Sch 7, cll 46 to 50, Sch 8, cll 51 to 60, Sch 9, cll 61 and 62, Sch 10, cll 63 and 64, cl 82, Sch 15, cl 83 to 122, Sch 16, cll 123 to 128, cll 130 and 131, cll 137 to 141, Sch 17, cll 142 and 143, cl 155, Sch 23, cll 156 to 168, Sch 24, cll 169 to 172, Sch 25, cll 173 to 179, new clauses, new Schedules, remaining proceedings on the Bill.
The government has already tabled a number of amendments for the Public Bill Committee.
