Finance (No. 2) Act 2015

PART 1 — Principal rates etc

Tax lock

Income tax lock

1

• (1) For any tax year to which this section applies—

• (a) the basic rate of income tax shall not exceed 20%,

• (b) the higher rate of income tax shall not exceed 40%, and

• (c) the additional rate of income tax shall not exceed 45%.

• (2) This section applies to a tax year—

• (a) which begins after the day on which this Act is passed but before the date of the first parliamentary general election after that day, and

• (b) for which income tax is charged.

Banking companies: surcharge

2

• (1) The rate of value added tax for the time being in force under section 2 of VATA 1994 (standard rate) shall not exceed 20% during the VAT lock period.

• (2) The rate of value added tax for the time being in force under section 29A of VATA 1994 (reduced rate) shall not exceed 5% during the VAT lock period.

• (3) No supply specified in Schedule 7A to VATA 1994 (charge at reduced rate) at the beginning of the VAT lock period may be removed from it under section 29A(3) of that Act during that period.

• (4) No goods, services or supply specified in Schedule 8 to VATA 1994 (zero-rating) at the beginning of the VAT lock period may be removed from it under section 30(4) of that Act during that period.

• (5) In this section the “VAT lock period” means the period beginning with the day on which this Act is passed and ending immediately before the date of the first parliamentary general election after that day.

Personal allowance and basic rate limit for income tax

Personal allowance and national minimum wage

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Personal allowance and national minimum wage: Chancellor’s duties

4

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Personal allowance from 2016

5

In section 5(1) of FA 2015 (personal allowance from 2016)—

• (a) in paragraph (a) (personal allowance for 2016-17), for “ “£10,800”” substitute “ “£11,000” ”, and

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Basic rate limit from 2016

6

In section 4(1) of FA 2015 (basic rate limit from 2016)—

• (a) in paragraph (a) (basic rate limit for 2016-17), for “ “£31,900”” substitute “ “£32,000” ”, and

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporation tax

Rate of corporation tax for financial years 2017-2020

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• (1) For the financial years 2017, 2018 and 2019 the main rate of corporation tax is 19%.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital allowances

Annual investment allowance

8

• (1) In section 51A of CAA 2001 (entitlement to annual investment allowance), for the amount specified in subsection (5) as the maximum allowance (which in the absence of this section would be £25,000 in relation to expenditure incurred on or after 1 January 2016) substitute “ £200,000 ”.

• (2) The amendment made by subsection (1) has effect in relation to expenditure incurred on or after 1 January 2016.

• (3) Subsection (2) is subject to paragraphs 4 and 5 of Schedule 2 to FA 2014 (which relate to cases involving chargeable periods which begin before 1 January 2016 and end on or after that day).

PART 2 — Inheritance tax

Rate bands

Increased nil-rate band where home inherited by descendants

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• (1) IHTA 1984 is amended as follows.

• (2) In section 7(1) (rates at which inheritance tax charged on the value transferred by a chargeable transfer) after “Subject to subsections (2), (4) and (5) below and to” insert “ section 8D and ”.

• (3) In section 8A(2) (test for whether person has unused nil-rate band on death), in the definition of M (maximum amount transferable at 0%), after “were sufficient but” insert “ that the maximum amount chargeable at nil per cent. under section 8D(2) is equal to the person's residence nil-rate amount and ”.

• (4) After section 8C insert—