Legalize / United Kingdom / Public General Act

Finance (No. 2) Act 2024

Type Public General Act

Publication 2024-05-24

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Income tax charge, rates etc

Income tax charge for tax year 2024-25

1

Income tax is charged for the tax year 2024-25.

Main rates of income tax for tax year 2024-25

2

For the tax year 2024-25 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Default and savings rates of income tax for tax year 2024-25

3

(1) For the tax year 2024-25 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(2) For the tax year 2024-25 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

Freezing starting rate limit for savings for tax year 2024-25

4

(1) For the tax year 2024-25 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.

High income child benefit charge

Increase in thresholds to £60,000 and £80,000

5

(1) In—

(a) section 681B(1)(a) of ITEPA 2003 (liability to high income child benefit charge if person’s adjusted net income exceeds £50,000), and

(b) section 681C(2)(b) of that Act (amount of the charge), in the definition of “L” ,

for “£50,000” substitute £60,000”.

(2) In section 681C(2)(b) of that Act, in the definition of “X” (which, in combination with the other parts of the formula, secures that there is a taper in the charge up to adjusted net incomes of £60,000), for “£100” substitute “£200”.

(3) The amendments made by this section have effect for the tax year 2024-25 and subsequent tax years.

(4) If—

(a) a person (“P”) who is entitled to child benefit in respect of one or more children makes a claim, on or after 6 April 2024 but before 8 July 2024, for the payment of the benefit, and

(b) in consequence of the backdating of the entitlement, P is entitled to an amount in respect of child benefit for one or more weeks in the tax year 2023-24,

the entitlement to those amounts is to be treated for the purposes of Chapter 8 of Part 10 of ITEPA 2003 as an entitlement to those amounts for weeks in the tax year 2024-25.

(5) But subsection (4) does not apply if—

(a) ignoring the deeming in that subsection, there would be no liability (whether of P or anyone else) to a high income child benefit charge for the tax year 2023-24 in respect of those amounts, or

(b) P makes an election for that subsection not to apply.

(6) P may make an election under subsection (5)(b) only if P reasonably considers that, in the absence of the election, P’s liability to a high income child benefit charge for the tax year 2024-25 in respect of those amounts would exceed P’s liability to that charge for the tax year 2023-24 in respect of those amounts.

(7) Section 681H(3) of ITEPA 2003 applies for the purposes of subsection (4) as it applies for the purposes of Chapter 8 of Part 10 of that Act.

Measures relating to property

Reduction in higher CGT rate for residential property gains to 24%

6

(1) In section 1H of TCGA 1992 (the main rates of CGT)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) in subsection (2), omit paragraph (a) together with the “or” at the end of the paragraph,

(d) in subsection (5), omit paragraph (a) together with the “or” at the end of the paragraph, and

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In section 1I of that Act (income taxed at higher rates or gains exceeding unused basic rate band)—

(a) in subsection (1)—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) in that paragraph, omit “residential property gains or”,

(b) in subsection (2), in the words after paragraph (b)—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) omit “residential property gains or”,

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) in that paragraph, omit “residential property gains or”, and

(d) in subsection (9)—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) in that paragraph, omit “residential property gains or”.

(3) The amendments made by this section have effect in relation to disposals made on or after 6 April 2024.

Abolition of multiple dwellings relief for SDLT

7

(1) Section 58D of, and Schedule 6B to, FA 2003 (relief for transfers involving multiple dwellings) are repealed.

(2) In consequence of the repeal of those provisions—

(a) in Part 4 of FA 2003—

(i) in section 87(3) (interest on unpaid tax: meaning of “relevant date”), omit paragraph (aza),

(ii) in Schedule 4A (higher rates for certain transactions), in paragraph 2(6), omit paragraph (d) and, in paragraph 7, for sub-paragraph (6) substitute—

(6) In sub-paragraph (5)— - “contract” includes any agreement; - “relevant deeming provision” means any of sections 44 to 45A, paragraph 5(1) or (2) of Schedule 2A or paragraph 12A or 19(3) of Schedule 17A.

(iii) in Schedule 5 (amount of tax chargeable: rent), in paragraph 9, in sub-paragraph (4), omit “or 6B” and, in sub-paragraph (5), omit “or Schedule 6B”,

(iv) in Schedule 10 (returns, enquiries, assessments and appeals), in paragraph 12(2A)(a), for “, 81A” substitute “or 81A” and omit “or paragraph 6 of Schedule 6B (adjustment for change of circumstances)”, and

(v) in Schedule 15 (partnerships), in paragraphs 11(2C) and 19(2C), in the substituted paragraph, omit “or 6B”,

(b) in Schedule 36 to FA 2008 (information and inspection powers), in paragraph 21A(7), omit paragraph (b) and the “or” before it, and

(3) The amendments made by this section have effect in relation to land transactions the effective date of which falls on or after 1 June 2024.

(4) But those amendments do not have effect in relation to a land transaction if—

(a) the transaction is effected in pursuance of a contract entered into and substantially performed before 1 June 2024, or

(b) the transaction is effected in pursuance of a contract entered into on or before 6 March 2024 and is not excluded.

(5) For this purpose a land transaction is excluded if—

(a) there is any variation of the contract, or assignment of rights under the contract, after 6 March 2024,

(b) the transaction is effected in consequence of the exercise after that date of any option, right of pre-emption or similar right, or

(c) after that date, there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

(6) If—

(a) pre-commencement land transactions are linked to post-commencement land transactions, and

(b) all of the transactions would (but for this section) be relevant transactions for the purposes of Schedule 6B to FA 2003,

a claim under that Schedule is available only in relation to the pre-commencement land transactions.

(7) If a claim under that Schedule is made in relation to those transactions, none of the post-commencement land transactions are to be regarded any longer as linked to any of the pre-commencement land transactions for the purposes of Schedule 6B to FA 2003 and all other purposes of Part 4 of that Act.

(8) For this purpose—

“pre-commencement land transactions” means land transactions the effective date of which falls before 1 June 2024 or which meet the condition in subsection (4)(a) or (b), and

“post-commencement land transactions” means all other land transactions.

(9) The amendments made by this section also do not have effect in relation to land transactions the effective date of which falls on or after 1 June 2024 if they fall within a description of land transactions specified in regulations made by the Treasury (irrespective of the date on which the regulations are made).

(10) The regulations may make provision of a kind mentioned in section 114(6)(a) to (c) of FA 2003 but may not be made on or after 1 February 2025.

First-time buyers’ relief from SDLT: acquisition of new lease on bare trust

8

(1) Schedule 6ZA to FA 2003 (relief for first-time buyers) is amended as follows.

(2) In Part 1 (eligibility for relief), after paragraph 3 insert—

(3A) In determining who is the purchaser for the purposes of paragraphs 1(4) and 2(2), paragraph 3 of Schedule 16 is to have effect as if sub-paragraphs (2) and (3) (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) were omitted.

(3) In paragraph 6 (definition of “first-time buyer”), at the end insert—

(3) In determining any question for the purposes of sub-paragraph (1), paragraph 3 of Schedule 16 is to have effect as if sub-paragraphs (2) and (3) (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) were omitted.

(4) The amendment made by subsection (2) has effect for the purposes of claims for relief under paragraph 1 of Schedule 6ZA to FA 2003 made in relation to any land transaction the effective date of which falls on or after 6 March 2024.

(5) The amendment made by subsection (3) also has effect for the purposes of claims for relief under that paragraph made in relation to any land transaction the effective date of which falls on or after that date unless—

(a) the transaction is effected in pursuance of a contract entered into on or before that date, and

(b) the transaction is not excluded.

(6) For this purpose a land transaction is excluded if—

(a) there is any variation of the contract, or assignment of rights under the contract, after 6 March 2024,

(b) the transaction is effected in consequence of the exercise after that date of any option, right of pre-emption or similar right, or

(c) after that date, there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

Exemption from SDLT: registered providers of social housing etc

9

(1) Section 71 of FA 2003 (certain acquisitions by registered social landlord) is amended as follows.

(2) In the heading, for “registered social landlord” substitute “registered providers of social housing etc”.

(3) In subsection (1), for paragraph (a) substitute—

(a) the purchaser is a non-profit registered provider of social housing controlled by its tenants,

(4) In subsection (1A)—

(a) for paragraph (b) substitute—

(b) a housing association registered in the register maintained under Article 14 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/1725 (N.I. 15)), or (c) an English local authority that is a registered provider of social housing.

, and

(b) omit the “or” after paragraph (a).

(5) In subsection (2) for “relevant housing provider”, in each place it occurs, substitute “non-profit registered provider of social housing”.

(6) In subsection (3)—

(a) omit paragraphs (b) and (e) to (g), and

(b) for paragraph (h) substitute—

(h) the Department for Communities in Northern Ireland, or

(7) In subsection (4) omit paragraphs (b) and (d) (but not the “or” after paragraph (d)).

(8) In subsection (5)—

(a) after “means” insert

— (a) any amount that is receipts of the disposal of social housing, provided the purchaser is entitled to use the amount for the purpose of the provision of social housing, or (b)

, and

(b) in paragraph (b) (which is a result of the previous amendment) omit the words from “within” to the end.

(9) After subsection (5) insert—

(6) In subsection (5) “social housing” has the meaning it has in Part 2 of the Housing and Regeneration Act 2008 (see, in particular, section 68 of that Act). (7) In this section “English local authority” means— (a) a principal council within the meaning of the Local Government Act 1972, or (b) the Common Council of the City of London.

(10) In section 121 of FA 2003 (minor definitions), omit the definition of “registered social landlord”.

(11) In section 122 of FA 2003 (index of defined expressions), omit the entry for “registered social landlord”.

(12) The amendments made by this section have effect in relation to land transactions the effective date of which falls on or after 6 March 2024.

(13) In consequence of those amendments, in section 150 of FA 2013 (annual tax on enveloped dwellings: relief for providers of social housing etc)—

(a) in subsection (2)(a)—

(i) for “relevant” substitute “qualifying”, and

(ii) omit the words from “(that” to “landlord)”,

(b) in subsection (3), for “relevant”, in each place it occurs, substitute “qualifying”, and

(a) subsection (2) of section 71 of FA 2003 applies in relation to a reference to a qualifying housing provider controlled by its tenants as it applies to a reference in that section to a non-profit registered provider of social housing controlled by its tenants; (b) “qualifying body” means— (i) anything described as a qualifying body in subsection (3) of that section, (ii) the Scottish Ministers, (iii) a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994, or (iv) Scottish Homes; (c) “public subsidy” means— (i) anything that is a public subsidy for the purposes of section 71 of FA 2003, and for the purposes of this section the reference in subsection (5)(a) of that section to “the purchaser” is to be treated as a reference to P or the qualifying housing provider (as the case may be); (ii) any grant or other financial assistance under section 18 of the Housing Act 1996 (c. 52) (social housing grants); (iii) any grant or other financial assistance under section 2 of the Housing (Scotland) Act 1988 (c. 43) (general functions of the Scottish Ministers); (d) “qualifying housing provider” means— (i) a relevant housing provider (within the meaning of section 71 of FA 2003), (ii) a body registered as a social landlord in a register maintained under section 1(1) of the Housing Act 1996 (Welsh registered social landlords), or (iii) a body registered under section 20(1) of the Housing (Scotland) Act 2010 (asp 17) (Scottish registered social landlords).

(14) Subsection (13) is to be treated as having come into force on 6 March 2024.

Purchases by public bodies not to be subject to special 15% rate of SDLT

10

(1) In paragraph 3 of Schedule 4A to FA 2003 (application of the higher rate of 15% to transactions where purchaser is a company etc)—

(a) in sub-paragraph (3)(a) and (b), after “company” insert “but is not a public body”, and

(b) in sub-paragraph (4), at the end insert “and, for the purposes of that sub-paragraph, whether a person is a public body is to be determined in accordance with section 66”.

(2) The amendments made by this section have effect in relation to land transactions the effective date of which falls on or after 6 March 2024.

Treatment of non-UK agricultural property and woodlands for IHT purposes

11

(1) IHTA 1984 is amended in accordance with subsections (2) to (5).

(2) In section 16(1) (grant of tenancies of agricultural property), omit “, the Channel Islands or the Isle of Man”.

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