This follows the decision to delay the enactment of the second Finance Bill of the year following the general election, which left MPs and select committees insufficient time to examine the proposals and consult on detailed draft legislation. The April Finance Act 2017 was heavily truncated due to the snap election, meaning that much of the legislation which was expected to come into force from 1 April 2017 has not legislated for.

The majority of the measures will be enforced retrospectively and backdated to the beginning of the 2017/18 tax year except of course for Making Tax Digital which has been delayed.

On Making Tax Digital the government confirms that the second Finance Bill will ‘make provision for digital reporting and record-keeping for businesses within the charge to income tax and for partnerships… and in connection with reporting and record-keeping for value added tax, which is expected to come into force from 2019.

As expected, the rules changes to non-doms will go ahead, although there is no clarity on the final legislation, which will make provision (including with retrospective effect) for tax purposes: a) for and in connection with deeming individuals to be domiciled in the UK; and b) in relation to settlements with a settlor domiciled outside the UK at any time.

The measures on ‘no pre-arranged exits requirement’ will be retrospective for the purposes of the enterprise investment scheme (EIS), seed enterprise investment scheme (SEIS) and venture capital trusts, as are the changes to social investment tax relief. Likewise business investment relief changes will also be retrospective.

Raising the limit on cash basis accounting will be effective immediately which means small businesses will be able to use this system for the current year end.  

Interest deductibility and corporation tax relief for losses will be retrospective, although there are still concerns that the draft legislation on the latter has not been fully scrutinised.

On disguised remuneration schemes, some of the aspects of the new rules will be retrospective including the income tax treatment of loans, or acquired rights, but the application of Chapter 2 of Part 7A of the Income Tax (Earning and Pensions) Act 2003 will take effect in a future year.

It also confirms that changes to the rules for taxing employment income paid through third parties will come into force immediately, so are effective as of 21 July 2017. This will restrict a specific relief for payments of tax to exclude payments of income tax and national insurance contributions. This removes an unintended consequence of the relief.

The document does indicate that some measures have been delayed, with the note on the dividend nil rate stating that the Finance Bill will ‘make provision taking effect in a future year about the dividend nil rate of income tax’. This means that the proposal to cap the dividend nil rate at £2,000 will come into force in a subsequent Finance Bill. When the cap was announced in Budget 2017, the Chancellor Philip Hammond stated that the measure would be effective from April 2018.

On taxable benefits, the notice confirms that the government will go ahead with amendments to Part 3 of the Income Tax (Earnings and Pensions) Act 2003; and b) in a future year will amend Chapter 6 of Part 3 on taxable benefits covering cars.

 The Treasury/HMRC Notes on Finance Bill (No.2) 2017 resolutions is available here

Report by Sara White