Finance Act 2022

PART 1 — Income tax, corporation tax and capital gains tax

Income tax charge, rates etc

Income tax charge for tax year 2022-23

1

Income tax is charged for the tax year 2022-23.

Main rates of income tax for tax year 2022-23

2

For the tax year 2022-23 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 2022-23

3

• (1) For the tax year 2022-23 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 2022-23 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%.

Increase in rates of tax on dividend income

4

• (1) In section 8 of ITA 2007 (which provides, among other things, for the dividend ordinary rate, dividend upper rate and dividend additional rate)—

• (a) in subsection (1) (the dividend ordinary rate), for “7.5%” substitute “8.75%”,

• (b) in subsection (2) (the dividend upper rate), for “32.5%” substitute “33.75%”, and

• (c) in subsection (3) (the dividend additional rate), for “38.1%” substitute “39.35%”.

• (2) In section 9(2) of ITA 2007 (the dividend trust rate), for “38.1%” substitute “39.35%”.

• (3) The amendments made by this section have effect for the tax year 2022-23 and subsequent tax years.

Freezing starting rate limit for savings for tax year 2022-23

5

• (1) For the tax year 2022-23 the amount specified in section 12(3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.

• (2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for that tax year.

Banking surcharge

Rate of surcharge and surcharge allowance

6

• (1) In section 269DA(1) of CTA 2010 (surcharge on banking companies), for “8%” substitute “3%”.

• (2) In each of the following provisions of Part 7A of CTA 2010 (which make provision in relation to the surcharge allowance), for “£25,000,000” substitute “£100,000,000”—

• (a) section 269DE(3) and (4),

• (b) section 269DF(2) and (3), and

• (c) section 269DJ(3).

• (3) The amendments made by this section have effect for accounting periods beginning on or after 1 April 2023.

• (4) The remaining provisions of this section deal with a case where a company has an accounting period (a “straddling period”) beginning before 1 April 2023 and ending on or after that date.

• (5) For the purpose of calculating—

• (a) the amount of surcharge chargeable on a company for the straddling period, and

• (b) the sum chargeable on a company at step 5 in section 371BC(1) of TIOPA 2010 (and see, in particular, section 371BI of that Act) for the straddling period,

so much of the straddling period as falls before 1 April 2023, and so much of it as falls on or after that date, are to be treated as separate accounting periods.

• (6) If it is necessary to apportion an amount for the straddling period to the two separate accounting periods, see section 1172 of CTA 2010 (which applies as a result of section 269DL of CTA 2010).

Trading and property income

Abolition of basis periods

7

Schedule 1 makes provision for and in connection with the abolition of basis periods under Chapter 15 of Part 2 of ITTOIA 2005.

Profits of property businesses: late accounting date rules

8

• (1) Chapter 3 of Part 3 of ITTOIA 2005 (profits of property businesses: basic rules) is amended as follows.

• (2) In section 275 (apportionment etc of profits to tax year)—

• (a) in subsection (1), for “This section applies” substitute “This section and sections 275A to 275C apply”;

• (b) at the end insert—

(5) Sections 275A and 275B contain rules for the purpose of avoiding the need to apportion profits or losses under this section (and section 275C makes provision for the person carrying on the business to elect for those rules not to apply).

• (3) After section 275 insert—

(275A) (1) This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business— (a) starts to carry it on after 31 March, and (b) does not permanently cease to carry it on. (2) For the purposes of this Part— (a) the profits or losses of the business of the relevant tax year are treated as nil, and (b) the actual profits or losses of the business of the relevant tax year are treated as arising in the following tax year. (275B) (1) This section applies if, in a tax year (“the relevant tax year”), the person carrying on the business— (a) does not start to carry it on or starts to carry it on before 1 April, (b) does not permanently cease to carry it on, and (c) has an accounting date that is 31 March or 1, 2, 3 or 4 April. (2) For the purposes of this Part— (a) the profits or losses of the business of the period beginning with the day after the accounting date and ending with 5 April in the relevant tax year are treated as nil, and (b) the actual profits or losses of the business of that period are treated as arising in the following tax year. (3) In this section, “accounting date” in relation to a tax year means— (a) the date in the tax year to which accounts are drawn up, or (b) if there are two or more such dates, the latest of them. (275C) (1) The person carrying on the business may make an election under this section. (2) If an election under this section has effect for a tax year, neither of sections 275A and 275B apply in relation to the business for that tax year. (3) An election under this section— (a) must be made on or before the first anniversary of the normal self-assessment filing date for the first tax year for which it is to have effect, and (b) has effect for that tax year and the four tax years following that tax year (subject to subsection (4)). (4) If the person permanently ceases to carry on the business before the end of the last of the tax years mentioned in subsection (3)(b), the election has effect for each tax year up to and including the tax year immediately before the tax year in which the person permanently ceases to carry on the business.

• (4) The amendments made by this section have effect for the tax year 2023-24 and subsequent tax years.

Pensions

Liability of scheme administrator for annual allowance charge

9

• (1) Part 4 of FA 2004 (pension schemes etc) is amended as follows.

• (2) In section 237B(5)(a) (liability of scheme administrator for annual allowance charge), for “not later than 31 July in the year following that in which the tax year ends” substitute “in accordance with the time limit in section 237BA”.

• (3) After that section insert—

(237BA) (1) This section specifies the time limit for an individual to give a notice under section 237B(3) in relation to a pension scheme for a tax year (see section 237B(5)(a)). (2) Except where subsection (5) applies, the individual must give the notice not later than 31 July in the year following the year in which the tax year ends. (3) Subsection (5) applies where— (a) at a relevant time, the scheme administrator gives the individual information about a change to the pension scheme input amount in relation to the pension scheme for the tax year, (b) the scheme administrator is required to give the individual the information by regulations under section 251, and (c) section 237B applies to the individual, in relation to the pension scheme and the tax year, as a result of that change. (4) In subsection (3), “relevant time” means a time falling— (a) on or after 2 May in the year following that in which the tax year in question ends, and (b) before the end of the period of 6 years beginning with the end of the tax year in question. (5) Where this subsection applies, the individual must give the notice before whichever is the earlier of the following— (a) the end of the period of 3 months beginning with the day on which the scheme administrator gives the individual the information described in subsection (3)(a), and (b) the end of the period of 6 years beginning with the end of the tax year in question. (6) In this section, “pension scheme input amount” has the meaning given in section 237B(2).

• (4) In section 254 (accounting for tax by scheme administrators)—

• (a) in subsection (7A), for the words from “the period ending” to the end substitute

the later of— (a) the period ending with 31 December in the year following that in which that tax year ended, and (b) the period following the period in which the scheme administrator receives the notice which gives rise to the liability, subject to subsections (7AA) and (7B).

,

• (b) after that subsection insert—

(7AA) The tax described in subsection (7A) is to be taken for the purposes of subsection (2) to be charged in an earlier period if the scheme administrator makes an election to that effect in the return for the earlier period.

, and

• (c) in subsection (7B)—

• (i) omit “But”, and

• (ii) after “(7A)” insert “or (7AA)”.

Increase of normal minimum pension age

10

• (1) Part 4 of FA 2004 (pension schemes etc) is amended in accordance with subsections (2) to (6).

• (2) In section 279(1) (other definitions), for the definition of “normal minimum pension age” substitute—

• “normal minimum pension age” means— in relation to, and to a member of, a pension scheme that is not a uniformed services pension scheme— before 6 April 2010, 50, on and after that date but before 6 April 2028, 55, and on and after 6 April 2028, 57, and in relation to, and to a member of, a uniformed services pension scheme— before 6 April 2010, 50, and on and after that date, 55,

.

• (3) In that section, after subsection (3) insert—

(4) In this section “uniformed services pension scheme” means a pension scheme that— (a) is established by or under an enactment or Royal Warrant for the benefit of persons described in subsection (5) (whether or not other persons may be members of such a scheme), or (b) is established solely for the receipt of additional voluntary contributions from members of a scheme falling within paragraph (a), subject to any regulations made under subsection (6). (5) Those persons are persons who are or were— (a) members of the naval, military or air forces of the Crown (including members of any reserve force); (b) members of a police force other than the Civil Nuclear Constabulary; (c) firefighters. (6) The Treasury may by regulations — (a) amend subsection (5) by adding to, varying or omitting descriptions of persons; (b) provide for a pension scheme not falling within subsection (4)(a) or (b) that is specified, or is of a specified description, to be treated as a uniformed services pension scheme; (c) provide for a pension scheme falling within subsection (4)(a) or (b) that is specified, or is of a specified description, to be treated as not being a uniformed services pension scheme. “Specified” means specified in the regulations. (7) Regulations under subsection (6) may make transitional provision and savings.

• (4) In Schedule 36 (pension schemes etc: transitional provisions and savings), in paragraph 21 (member’s protected pension age applies instead of normal minimum pension age)—

• (a) in sub-paragraph (1), for “or 23” substitute “, 23 or 23ZB”;

• (b) in sub-paragraph (2), for “and 23(8)” substitute “, 23(8) and 23ZB(7)”.

• (5) In that Schedule, after paragraph 23ZA insert—