LegalizeFinance Act 2020
PART 1 — Income tax, corporation tax and capital gains tax
Income tax charge, rates etc
Income tax charge for tax year 2020-21
1
Income tax is charged for the tax year 2020-21.
Main rates of income tax for tax year 2020-21
2
For the tax year 2020-21 the main rates of income tax are as follows—
- (a) the basic rate is 20%,
- (b) the higher rate is 40%, and
- (c) the additional rate is 45%.
Default and savings rates of income tax for tax year 2020-21
3
- (1) For the tax year 2020-21 the default rates of income tax are as follows—
- (a) the default basic rate is 20%,
- (b) the default higher rate is 40%, and
- (c) the default additional rate is 45%.
- (2) For the tax year 2020-21 the savings rates of income tax are as follows—
- (a) the savings basic rate is 20%,
- (b) the savings higher rate is 40%, and
- (c) the savings additional rate is 45%.
Starting rate limit for savings for tax year 2020-21
4
Section 21 of ITA 2007 (indexation) does not apply in relation to the starting rate limit for savings for the tax year 2020-21 (so that the starting rate limit for savings remains at £5,000 for that tax year).
Corporation tax charge and rates
Losses on disposal of shares: abolition of requirement to be UK business
5
- (1) For the financial year 2020 the main rate of corporation tax is 19%.
- (2) Accordingly, omit section 7(2) of F(No.2)A 2015 (which is superseded by the provision made by subsection (1)).
Relief for certain cross-border transactions
6
- (1) Corporation tax is charged for the financial year 2021.
- (2) The main rate of corporation tax for that year is 19%.
Employment income and social security income
Workers’ services provided through intermediaries
7
Schedule 1 makes provision about workers' services provided through intermediaries.
Determining the appropriate percentage for a car: tax year 2020-21 onwards
8
- (1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) is amended as follows.
- (2) In section 136 (car with a CO₂ emissions figure: post-September 1999 registration)—
- (a) in subsection (2A)—
- (i) after “figure” insert “ in a case where the car is first registered before 6 April 2020 ”,
- (ii) for “light-duty” substitute “ light ”, and
- (iii) for “an EC certificate of conformity” substitute “ the EC certificate of conformity or UK approval certificate ”, and
- (b) after subsection (2A) insert—
(2B) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered on or after 6 April 2020, ignore any values specified in the EC certificate of conformity or UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.
- (3) In section 137 (car with a CO₂ emissions figure: bi-fuel cars)—
- (a) in subsection (2A)—
- (i) after “figure” insert “ in a case where the car is first registered before 6 April 2020 ”,
- (ii) for “light-duty” substitute “ light ”, and
- (iii) for “an EC certificate of conformity” substitute “ the EC certificate of conformity or UK approval certificate ”, and
- (b) after subsection (2A) insert—
(2B) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered on or after 6 April 2020, ignore any values specified in the EC certificate of conformity or UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.
- (4) In section 139 (car with a CO₂ emissions figure)—
- (a) for subsection (2) substitute—
(2) For the purposes of subsection (1) and the table— (a) if a CO₂ emissions figure is not a whole number, round it down to the nearest whole number, and (b) if an electric range figure is not a whole number, round it up to the nearest whole number.
, and
- (b) after subsection (5) insert—
(5A) For the purpose of determining the electric range figure for a car first registered before 6 April 2020, ignore any WLTP (worldwide harmonised light vehicle test procedures) values specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate. (5B) For the purpose of determining the electric range figure for a car first registered on or after 6 April 2020, ignore any values specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.
- (5) The amendments made by this section have effect for the tax year 2020-21 and subsequent tax years.
Determining the appropriate percentage for a car: tax year 2020-21 only
9
- (1) For the tax year 2020-21, Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) has effect with the following modifications.
- (2) In section 139 (car with a CO₂ emissions figure: the appropriate percentage)—
- (a) in the table in subsection (1), in the second column of the entry for a car with a CO₂ emissions figure of 0, for “2%” substitute “ 0% ”, and
- (b) in subsection (7) before paragraph (a) insert—
(za) section 139A (recently registered cars),
.
- (3) After section 139 insert—
(139A) In its application in relation to a car that is first registered on or after 6 April 2020, section 139 has effect as if— (a) for the table in subsection (1) there were substituted—
| Car | Appropriate percentage |
|---|---|
| Car with CO₂ emissions figure of 0 | 0% |
| Car with CO₂ emissions figure of 1 - 50 | |
| Car with electric range figure of 130 or more | 0% |
| Car with electric range figure of 70 - 129 | 3% |
| Car with electric range figure of 40 - 69 | 6% |
| Car with electric range figure of 30 - 39 | 10% |
| Car with electric range figure of less than 30 | 12% |
| Car with CO₂ emissions figure of 51 - 54 | 13% |
| Car with CO₂ emissions figure of 55 - 59 | 14% |
| Car with CO₂ emissions figure of 60 - 64 | 15% |
| Car with CO₂ emissions figure of 65 - 69 | 16% |
| Car with CO₂ emissions figure of 70 - 74 | 17% |
(b) in subsection (3)(a) for “20%” there were substituted “ 18% ”.
- (4) In section 140 (car without a CO₂ emissions figure: the appropriate percentage) in subsection (3)(a) for “2%” substitute “ 0% ”.
Determining the appropriate percentage for a car: tax year 2021-22 only
10
- (1) For the tax year 2021-22, Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) has effect with the following modifications.
- (2) In section 139 (car with a CO₂ emissions figure: the appropriate percentage)—
- (a) in the table in subsection (1), in the second column of the entry for a car with a CO₂ emissions figure of 0, for “2%” substitute “ 1% ”, and
- (b) in subsection (7) before paragraph (a) insert—
(za) section 139A (recently registered cars),
.
- (3) After section 139 insert—
(139A) In its application in relation to a car that is first registered on or after 6 April 2020, section 139 has effect as if— (a) for the table in subsection (1) there were substituted—
| Car | Appropriate percentage |
|---|---|
| Car with CO₂ emissions figure of 0 | 1% |
| Car with CO₂ emissions figure of 1 - 50 | |
| Car with electric range figure of 130 or more | 1% |
| Car with electric range figure of 70 - 129 | 4% |
| Car with electric range figure of 40 - 69 | 7% |
| Car with electric range figure of 30 - 39 | 11% |
| Car with electric range figure of less than 30 | 13% |
| Car with CO₂ emissions figure of 51 - 54 | 14% |
| Car with CO₂ emissions figure of 55 - 59 | 15% |
| Car with CO₂ emissions figure of 60 - 64 | 16% |
| Car with CO₂ emissions figure of 65 - 69 | 17% |
| Car with CO₂ emissions figure of 70 - 74 | 18% |
(b) in subsection (3)(a) for “20%” there were substituted “ 19% ”.
- (4) In section 140 (car without a CO₂ emissions figure: the appropriate percentage) in subsection (3)(a) for “2%” substitute “ 1% ”.
Apprenticeship bursaries paid to persons leaving local authority care
11
- (1) In Part 4 of ITEPA 2003 (employment income: exceptions), in Chapter 4 (exemptions: education and training), after section 254 insert—
(254A) (1) No liability to income tax arises in respect of a care leaver's apprenticeship bursary payment. (2) A care leaver's apprenticeship bursary payment is a payment— (a) payable out of the public revenue, (b) to a care leaver (see subsection (3)), (c) made in connection with the person's employment as an apprentice (see subsection (4)), and (d) in respect of which any conditions specified in regulations made by the Treasury are met. (3) A person is a care leaver if they are a person— (a) who is, or was, a child looked after— (i) by a local authority in England within the meaning of section 22 of the Children Act 1989 (general duty of local authority in relation to children looked after by them); (ii) by a local authority in Wales within the meaning of the Social Services and Well-being (Wales) Act 2014 (anaw 4) (see section 74 of that Act (child or young person looked after by a local authority)); (iii) by a local authority in Scotland within the meaning of Chapter 1 of Part 2 of the Children (Scotland) Act 1995 (see section 17(6) of that Act (duty of local authority to child looked after by them)); (iv) by an authority in Northern Ireland within the meaning of the Children (Northern Ireland) Order 1995 (S.I. 1995/755 (N.I. 2)) (see Article 25 of that Order (children looked after by an authority: interpretation)), and (b) in respect of whom any other conditions specified in regulations made by the Treasury are met. (4) “Apprentice” has the meaning specified in regulations made by the Treasury. (5) Regulations under this section— (a) may make provision framed by reference to a scheme (however described or named), or document, as it has effect from time to time, (b) may make different provision for different purposes, (c) may make different provision for different areas, and (d) may make retrospective provision.
- (2) The amendment made by this section has effect in relation to the tax year 2020-21 and subsequent tax years.
Tax treatment of certain Scottish social security benefits
12
- (1) Table B in section 677(1) of ITEPA 2003 (UK social security benefits wholly exempt from income tax) is amended as follows.
- (2) In Part 1 (benefits payable under primary legislation etc), insert each of the following at the appropriate place—
| Disability assistance for children and young people | SS(S)A 2018 | Sections 24 and 31 |
|---|---|---|
| Job start | ETA 1973 | Section 2 |
| --- | --- | --- |
.
- (3) In Part 2 (benefits payable under regulations), insert the following at the appropriate place—
| Scottish child payment | SS(S)A 2018 | Section 79 |
|---|---|---|
.
- (4) The amendments made by this section have effect for the tax year 2020-21 and subsequent tax years.
Power to exempt social security benefits from income tax
13
- (1) The Treasury may by regulations amend Chapter 4 or 5 of Part 10 of ITEPA 2003 (social security benefits: exemptions) so as to provide that no liability to income tax arises on social security benefits of a description specified in the regulations.
- (2) Regulations under this section may make—
- (a) different provision for different cases;
- (b) retrospective provision;
- (c) incidental or supplementary provision;
- (d) consequential provision (which may include provision amending any provision made by or under the Income Tax Acts).
- (3) In section 655 of ITEPA 2003 (structure of Part 10), in subsection (2), at the end insert
; section 13 of FA 2020 (power to exempt social security benefits from income tax).
Voluntary office-holders: payments in respect of expenses
14
- (1) After section 299A of ITEPA 2003 insert—
(299B) (1) No liability to income tax arises in respect of a payment to a person who holds a voluntary office if the payment is in respect of reasonable expenses incurred in carrying out the duties of that office. (2) It does not matter whether— (a) the payment is an advance payment or a reimbursement; (b) the person who makes the payment is the person with whom the office is held. (3) Subsections (2) and (3) of section 299A apply for the purposes of subsection (1) of this section as they apply for the purposes of subsection (1) of that section.
- (2) In section 299A(3)(a) of ITEPA 2003 (voluntary office-holders: compensation for lost employment income) after “payment” insert “ (whether an advance payment or a reimbursement) ”.
- (3) The amendments made by this section have effect for the tax year 2020-21 and subsequent tax years.
Loan charge
Loan charge not to apply to loans or quasi-loans made before 9 December 2010
15
- (1) In Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1 (person to be treated as taking a relevant step for the purposes of Part 7A of ITEPA 2003 by reason of making a loan or quasi-loan) in sub-paragraph (1)(b) for “6 April 1999” substitute “ 9 December 2010 ”.
- (2) In Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1 (application of sections 23A to 23H of ITTOIA 2005 in relation to certain loans and quasi-loans) in sub-paragraph (2)(a)(i) for “6 April 1999” substitute “ 9 December 2010 ”.
- (3) Part 1 of Schedule 2 makes further amendments to F(No.2)A 2017 in consequence of this section.
Election for loan charge to be split over three tax years
16
- (1) Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.
- (2) In paragraph 1 (person to be treated as taking a relevant step for the purposes of Part 7A of ITEPA 2003 by reason of making loan or quasi-loan)—
- (a) after sub-paragraph (6) insert—
(6A) Sub-paragraph (4) is subject to paragraph 1A(5).
, and
- (b) in sub-paragraph (7)—
- (i) in the words before paragraph (a) after “paragraph” insert “ and paragraph 1A ”, and
- (ii) in paragraph (a) for “the following provisions of this Schedule” substitute “ paragraphs 3 to 18 ”.
- (3) After paragraph 1 insert—
(1A) (1) This paragraph applies where— (a) a person (“P”) is treated as taking a relevant step within paragraph 1 (“the initial step”) by reason of making a loan or quasi-loan, and (b) an election has been made by A for the purposes of this paragraph. (2) P is treated as taking two further relevant steps for the purposes of Part 7A of ITEPA 2003. (3) P is treated as taking one of the further steps on the first anniversary of the date on which P is treated as taking the initial step. (4) P is treated as taking one of the further steps on the second anniversary of the date on which P is treated as taking the initial step. (5) For the purposes of section 554Z3(1) of ITEPA 2003 (value of relevant step), the initial step and each of the further steps is to be treated as involving a sum of money equal to one third of the amount of the loan or quasi-loan that is outstanding at the time P is treated as taking the initial step. (6) References in this Schedule and in Part 7A of ITEPA 2003 to a relevant step within paragraph 1A of this Schedule are to be read as references to a relevant step which a person is treated by this paragraph as taking. (7) An election for the purposes of this paragraph— (a) may be made at any time before 1 October 2020, and (b) may be made at a later time if an officer of Revenue and Customs allows it. (8) But a person who is under a duty imposed by paragraph 35C of this Schedule or paragraph 22 of Schedule 12 may not make an election for the purposes of this paragraph until that duty has been complied with. (9) An election for the purposes of this paragraph may not be revoked. (10) A person who has made an election for the purposes of paragraph 1(3A) of Schedule 12 is to be treated as having made an election for the purposes of this paragraph. (11) The Commissioners for Her Majesty's Revenue and Customs may by regulations provide that sub-paragraph (7)(a) applies to a specified class of persons as if the reference to 1 October 2020 were to such later date as is specified. (12) In sub-paragraph (11) “specified” means specified in the regulations.
- (4) Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.
- (5) In paragraph 1 (application of sections 23A to 23H of ITTOIA 2005 in relation to certain loans and quasi-loans)—
- (a) in sub-paragraph (1) for the words from “as a” to the end substitute “ for the purposes of sections 23A to 23H of ITTOIA 2005 as a relevant benefit that arises immediately before the end of 5 April 2019. ”,
- (b) in sub-paragraph (3)—
- (i) in the words before paragraph (a), after “applies” insert “ and T has not made an election for the purposes of sub-paragraph (3A) ”,
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