Legalize / United Kingdom / Public General Act

Finance Act 2017

Type Public General Act

Publication 2017-04-27

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Part 1 — Direct and indirect taxes

Income tax charge and rates

Income tax charge for tax year 2017-18

1

Income tax is charged for the tax year 2017-18.

Main rates of income tax for tax year 2017-18

2

For the tax year 2017-18 the main rates of income tax are as follows—

(a) the basic rate is 20%;

(b) the higher rate is 40%;

Default and savings rates of income tax for tax year 2017-18

3

(1) For the tax year 2017-18 the default rates of income tax are as follows—

(a) the default basic rate is 20%;

(b) the default higher rate is 40%;

(2) For the tax year 2017-18 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%;

(b) the savings higher rate is 40%;

Starting rate limit for savings for tax year 2017-18

4

(1) For the amount specified in section 12(3) of ITA 2007 (starting rate for savings) substitute “ £5000 ”.

(2) The amendment made by subsection (1) has effect in relation to the tax year 2017-18 and subsequent tax years.

(3) Section 21 of ITA 2007 (indexation), so far as relating to the starting rate limit for savings, does not apply in relation to the tax year 2017-18 (but this section does not override that section for subsequent tax years).

Corporation tax charge

Corporation tax charge for financial year 2018

5

Corporation tax is charged for the financial year 2018.

Income tax: general

Workers’ services provided to public sector through intermediaries

6

Schedule 1 makes provision about workers' services provided to the public sector through intermediaries.

Optional remuneration arrangements

7

Schedule 2 makes provision about optional remuneration arrangements.

Taxable benefits: asset made available without transfer

8

(1) ITEPA 2003 is amended as follows.

(2) In section 205 (cost of taxable benefit subject to the residual charge: asset made available without transfer)—

(a) in subsection (1), for paragraph (a) substitute—

(a) the benefit consists in an asset being made available for private use, and

(b) after subsection (1) insert—

(1A) In this section and section 205A, “private use” means private use by the employee or a member of the employee's family or household. (1B) For the purposes of subsection (1) and sections 205A and 205B, an asset made available in a tax year for use by the employee or a member of the employee's family or household is to be treated as made available throughout the year for private use unless— (a) at all times in the year when it is available for use by the employee or a member of the employee's family or household, the terms under which it is made available prohibit private use, and (b) no private use is made of it in the year. (1C) The cost of the taxable benefit is— (a) the annual cost of the benefit determined in accordance with subsection (2), less (b) any amount required to be deducted by section 205A (deduction for periods when asset unavailable for private use). (1D) In certain cases, the cost of the taxable benefit is calculated under this section in accordance with section 205B (reduction of cost of taxable benefit where asset is shared).

, and

(3) After section 205 insert—

(205A) (1) A deduction is to be made under section 205(1C)(b) if the asset mentioned in section 205(1) has been unavailable for private use on any day during the tax year concerned. (2) For the purposes of this section an asset is “unavailable” for private use on any day if— (a) that day falls before the day on which the asset is first available to the employee, (b) that day falls after the day on which the asset is last available to the employee, (c) for more than 12 hours during that day the asset— (i) is not in a condition fit for use, (ii) is undergoing repair or maintenance, (iii) could not lawfully be used, (iv) is in the possession of a person who has a lien over it and who is not the employer, not a person connected with the employer, not the employee, not a member of the employee's family and not a member of the employee's household, or (v) is used in a way that is neither use by, nor use at the direction of, the employee or a member of the employee's family or household, or (d) on that day the employee— (i) uses the asset in the performance of the duties of the employment, and (ii) does not use the asset otherwise than in the performance of the duties of the employment. (3) The amount of the deduction is given by— $$U Y × A$where—U is the number of days, in the tax year concerned, on which the asset is unavailable for private use,Y is the number of days in that year, andA is the annual cost of the benefit of the asset determined under section 205(2).$ (4) The reference in subsection (2)(a) to the time when the asset is first available to the employee is to the earliest time when the asset is made available, by reason of the employment and without any transfer of the property in it, for private use. (5) The reference in subsection (2)(b) to the time when the asset is last available to the employee is to the last time when the asset is made available, by reason of the employment and without any transfer of the property in it, for private use. (205B) (1) This section applies where the cost of an employment-related benefit (“the taxable benefit”) is to be determined under section 205. (2) If, for the whole or part of the tax year concerned, the same asset is available for more than one employee's private use at the same time, the total of the amounts which are the cost of the taxable benefit for each of those employees is to be limited to the annual cost of the benefit of the asset determined in accordance with section 205(2). (3) The cost of the taxable benefit for each employee is determined by taking the amount given by section 205(1C) and then reducing that amount on a just and reasonable basis. (4) For the purposes of this section, an asset is available for an employee's private use if it is available for private use by the employee or a member of the employee's family or household.

(4) In section 365 (deductions where employment-related benefit provided)—

(a) in subsection (1)—

(i) omit the “and” at the end of paragraph (a), and

(ii) after that paragraph insert—

(aa) the cost of the benefit was determined under section 204 or 206, and

(b) in subsection (3), for “sections 204 to 206” substitute “ section 204 or 206 ”, and

(5) The amendments made by this section have effect for the tax year 2017-18 and subsequent tax years.

Overseas pensions

9

Schedule 3 makes provision about—

(a) registered pension schemes established outside the United Kingdom, and

(b) payments made in respect of overseas pension entitlement.

Pensions: offshore transfers

10

Schedule 4 contains provision about charging income tax—

(a) where payments are made in respect of overseas pensions, and

(b) on transfers to qualifying recognised overseas pension schemes.

Deduction of income tax at source

11

Schedule 5 makes provision about deduction of income tax at source.

Employee shareholder shares

Employee shareholder shares: amount treated as earnings

12

(1) In section 226A of ITEPA 2003 (amount treated as earnings)—

(a) in subsection (2), for “calculated in accordance with subsection (3)” substitute “ equal to the market value of the shares ”;

(b) omit subsection (3);

(d) in subsection (7), after “subsection (1)” insert “ (but not subsection (2)) ”.

(2) Omit sections 226B to 226D of ITEPA 2003 (deemed payment).

(3) In consequence of subsection (2), in ITEPA 2003 omit the following—

(a) section 479(3A);

(b) section 531(3A);

(4) In consequence of subsection (2), in CTA 2009 omit the following—

(a) in section 1005, the definition of “employee shareholder share”;

(b) section 1009(6);

(d) in section 1011(4)(b), “(but see also section 1038B of this Act)“;

(e) in sections 1018(1) and 1019(1), “and, in the case of employee shareholder shares, section 1038B”;

(f) sections 1022(5), 1026(5), 1027(5), 1033(5) and 1034(5);

(g) section 1038B;

(h) sections 1292(6ZA) and 1293(5A);

(i) in Schedule 4, the entry relating to “employee shareholder share”.

(5) The amendments made by this section have effect in relation to shares acquired in consideration of an employee shareholder agreement entered into on or after the relevant day.

(6) The relevant day is 1 December 2016, subject to subsection (7).

(7) Where the individual entering into an employee shareholder agreement receives the advice referred to in section 205A(6)(a) of the Employment Rights Act 1996—

(a) on 23 November 2016, but

(b) before 1.30 pm on that day,

the relevant day is 2 December 2016.

Employee shareholder shares: abolition of CGT exemption

13

(1) TCGA 1992 is amended as follows.

(2) In section 58 (spouses and civil partners)—

(a) in subsection (2)—

(i) at the end of paragraph (a) insert “ or ”;

(ii) omit paragraph (c) and the preceding “or”;

(b) omit subsections (3) to (5).

(3) In section 149AA (restricted and convertible employment-related securities and employee shareholder shares), for subsection (6A) substitute—

(6A) For the purposes of this section— - shares are “acquired” by an employee if the employee becomes beneficially entitled to them (and they are acquired at the time when the employee becomes so entitled); - “employee shareholder share” means a share acquired in consideration of an employee shareholder agreement and held by the employee; - “employee shareholder agreement” means an agreement by virtue of which an employee is an employee shareholder (see section 205A(1)(a) to (d) of the Employment Rights Act 1996); - “employee” and “employer company”, in relation to an employee shareholder agreement, mean the individual and the company which enter into the agreement.

(4) Omit sections 236B to 236F (exemption for employee shareholder shares).

(5) In section 236G (relinquishment of employment rights is not disposal of an asset), in subsection (1), for “employee shareholder agreement” substitute “ agreement by virtue of which the individual is an employee shareholder (see section 205A(1)(a) to (d) of the Employment Rights Act 1996) ”.

(6) The amendments made by this section have effect in relation to shares acquired in consideration of an employee shareholder agreement entered into on or after the relevant day.

(7) The relevant day is 1 December 2016, subject to subsection (8).

(8) Where the individual entering into an employee shareholder agreement receives the advice referred to in section 205A(6)(a) of the Employment Rights Act 1996—

(a) on 23 November 2016, but

(b) before 1.30 pm on that day,

the relevant day is 2 December 2016.

Employee shareholder shares: purchase by company

14

(1) In ITTOIA 2005, omit section 385A (no charge to income tax on purchase by company of exempt employee shareholder shares).

(2) The amendment made by this section has effect in relation to the purchase from an individual of shares which were acquired in consideration of an employee shareholder agreement entered into on or after the relevant day.

(3) The relevant day is 1 December 2016, subject to subsection (4).

(4) Where the individual entering into an employee shareholder agreement receives the advice referred to in section 205A(6)(a) of the Employment Rights Act 1996—

(a) on 23 November 2016, but

(b) before 1.30 pm on that day,

the relevant day is 2 December 2016.

Disguised remuneration

Employment income provided through third parties

15

Schedule 6 makes provision about employment income provided through third parties.

Indirect taxes

VAT: zero-rating of adapted motor vehicles etc

16

Schedule 7 contains amendments of Schedule 8 to VATA 1994 (zero-rating).

Insurance premium tax: standard rate

17

(1) In section 51(2)(b) of FA 1994 (standard rate of insurance premium tax), for “10 per cent” substitute “ 12 per cent ”.

(2) Subject to subsection (3), the amendment made by subsection (1) has effect in relation to a premium falling to be regarded for the purposes of Part 3 of FA 1994 as received under a taxable insurance contract by an insurer on or after 1 June 2017.

(3) That amendment does not have effect in relation to a premium falling within subsection (4), unless the premium falls to be regarded for the purposes of Part 3 of FA 1994 as received under a taxable insurance contract by an insurer on or after 1 June 2018.

(4) A premium falls within this subsection if it is in respect of a risk for which the period of cover begins before 1 June 2017.

(5) In the application of sections 66A and 66B of FA 1994 (anti-forestalling provision) in relation to the increase in insurance premium tax made by this section, the announcement relating to that increase is to be taken to have been made on 8 March 2017 (and “the change date” is to be taken to be 1 June 2017).

(6) This section is to be read with section 66C of FA 1994 (premiums relating to more than one period of cover).

Insurance premium tax: anti-forestalling provision

18

(1) FA 1994 is amended as follows.

(2) After section 66 insert—

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