On 24 March 2016, the Government published the Finance Bill 2016, which will come into law when the Queen gives the Bill Royal Assent in July.
Most of the Bill was exposed in draft form for consultation having been announced at one of the three ‘Budgets’ held during 2015 – March Budget, Summer Budget and Autumn Statement, although there have been additions following last week’s Budget 2016.
Accountants and tax advisers will need to be aware of many changes that may affect their clients. Specifically, these may include:
1. Changes to Capital Gains Tax rates
Legislation is being introduced to reduce the rate of capital gains tax (CGT) charged on most gains accruing to basic rate taxpayers from 18% to 10%, and from 28% to 20% for higher rate taxpayers.
2. Restricted tax relief for travel and subsistence
Initially announced in last year’s Budget, the Bill intends to introduce legislation to restrict tax relief for travel and subsistence expenses for workers engaged through an employment-intermediary. This is with the intention to bring the rules for those affected into line with those that currently apply to those directly employed.
3. Income tax on sporting testimonials
Income above £100,000 arising from either sporting testimonials, or benefit matches, for employed sportspersons will be subjected to tax, provided the event takes place on or after 6 April 2017. Following consultation the proposed tax exemption applicable has been doubled (from £50,000).
4. Voluntary payrolling
Introduced by the 2015 Finance Act, this is to be extended to allow for the payrolling of non-cash vouchers and credit tokens from 6 April 2016.
5. Simplification of employee share scheme rules
For non-tax-advantaged schemes, the tax treatment for internationally-mobile employees of certain employment-related securities has been clarified.
Rules for Share Incentive Plans have been amended to enforce the principle that shares with preferential rights cannot be issued purely to selected employees.
The late notification of tax-advantaged share schemes has now also been permitted, provided the taxpayer has a reasonable excuse.
Finally, capital gains tax legislation has been revised so that a rights issue which takes place on or after 6 April 2016, regarding shared received on exercise of an Enterprise Management Incentive option, will be treated in the same way for share identification purposes as other rights issues.
6. Tackling disguised remuneration
The Government has brought forward a number of changes to ensure that those who have used disguised remuneration tax avoidance schemes pay their fair share of tax and National Insurance contributions. These schemes often involve individuals being paid in loans through structures including offshore Employee Benefit Trusts.
The Finance Bill 2016 can be found in full on the Government’s website here.
Brian Palmer is the tax policy adviser for AAT.