Finance (No. 2) Bill 2016 has a total of 179 clauses and runs to 583 pages. It includes details of the new higher rate tax threshold, which will be raised from £42,385 to £45,000 from April 2017, and the rise in the personal allowance from £11,000 to £11,500, as well as changes to company car taxable rates.

Key measures to come into force when the Bill is given Royal Assent this July include the changes to capital gains tax (CGT) rates, changes to tax on savings income with the introduction of a new annual personal savings allowance and some amendments to treatment of a number of issues on expenses compliance.

The basic rate of capital gains tax (CGT) is reduced from 18% to 10%, and the 28% rate to 20%, on most gains made by individuals, trustees and personal representatives. The bill also extends the 10% rate of CGT for gains qualifying for entrepreneurs' relief to include investors' relief. Gains accruing on the disposal of interests in residential properties that do not qualify for private residence relief, and gains arising in respect of carried interest, remain subject to the 18% and 28% rates. ATED-related gains also remain subject to the 28% rate.

The bill confirms that the corporation tax main rate for financial year commencing 1 April 2020, which was set at 18%, will have an additional 1% cut to 17% for that financial year.

The draft legislation introduces a new nil rate of tax for savings income (such as interest) within an individual's annual £1,000 savings allowance, alongside a new dividend allowance, which will apply to the first £5,000 of an individual's dividend income.

The measure also introduces new rates for dividends received above the £5,000 allowance, and abolishes the dividend tax credit. The new rules will apply from 6 April 2016.

A number of clauses address amendments and clarification of the rules regarding newly introduced measures, including the apprenticeship levy and the increased residence nil-rate band for inheritance tax (IHT) when an individual downsizes from a higher value residence to a lower value one or ceases to own a residence, and other assets are left on death to direct descendants.

Interest deductibility clampdown

In line with the push for global measures to counter tax avoidance and profit shifting by multiationals, there are clauses covering the UK government’s response to the OECD Base Erosion and Profit Shifting (BEPS) action plan including rules on interest deductibility, hybrid mismatches and the operation of the UK patent box regime.

There is also a clause to remove the requirement upon deposit-takers (such as banks), building societies and other institutions to deduct sums representing income tax from the interest or other returns they pay on certain savings, investments and alternative finance arrangements. The changes have effect in relation to interest paid or credited on and after 6 April 2016.

There will be a cap on the capital gains tax (CGT) exempt gains that a person can make on the disposal of shares acquired under Employee Shareholder Agreements entered into after 16 March 2016, with a lifetime limit of £100,000.

Travel and expenses

Other measures include the introduction of a statutory exemption from income tax for trivial benefits in kind (BiKs) provided by employers to employees, capped at £300 a year where the employer is a close company and the BiK is provided to a director or other office holder of that company.

The rules on travel and subsistence expenses for workers engaged through an employment intermediary are amended, and the legislation introduces several changes to simplify the tax rules and administrative processes for employee share schemes.

There will also be a new deduction for capital expenditure incurred by a lessor on replacing domestic items, including furnishings, appliances and kitchenware, provided for the use of a lessee in a dwelling-house. The deduction has effect for expenditure incurred on or after 6 April 2016 for income tax and 1 April 2016 for corporation tax. The existing the wear and tear allowance is repealed.

The bill confirms that sporting testimonials will be subject to income tax, and introduces a relief from corporation tax for qualifying orchestral concerts.

There are several measures to address tax avoidance in the finance bill, including a move to make the operators of online marketplaces jointly and severally liable for overseas sellers’ non compliance with VAT regulations.

There is a clause making changes to the Promoters of Tax Avoidance Schemes (POTAS) legislation in introducing a new threshold condition, which, if met, identifies a person who is a promoter of tax avoidance schemes as a promoter to whom a conduct notice may be given.

There is a new requirement for all qualifying groups, companies, partnerships and permanent establishments to publish a tax strategy, in relation to UK taxation, on the internet, plus a special measure regime to tackle aggressive tax planning, and new civil penalties for deliberate enablers of offshore tax evasion or other non-compliance.

HMRC is to be given new powers under the proposed legislation, including the ability to make an assessment of an individual's income tax or CGT liability without them first being required to complete a self-assessment return where HMRC has sufficient information about that individual. The legislation will have effect in relation to the 2016-17 tax year and subsequent years.

The final clause of the bill provides for the permanent establishment of the Office of Tax Simplification (OTS).

Details of the Finance (No. 2) Bill are here

Read our complete Budget 2016 coverage and analysis here