Previous Next

Contents page 1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 100-109 Last page

A

BILL

TO

Grant certain duties, to alter other duties, and to amend the law relating to the
National Debt and the Public Revenue, and to make further provision in
connection with finance.

Most Gracious Sovereign

WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the
United Kingdom in Parliament assembled, towards raising the necessary
supplies to defray Your Majesty’s public expenses, and making an addition to the
public revenue, have freely and voluntarily resolved to give and to grant unto Your
Majesty the several duties hereinafter mentioned; and do therefore most humbly
beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual and
Temporal, and Commons, in this present Parliament assembled, and by the authority
of the same, as follows:—

Part 1 Income tax, corporation tax and capital gains tax

CHAPTER 1 Charge, rates etc

Income tax

1 5Charge, rates, basic rate limit and personal allowance for 2014-15

(1) Income tax is charged for the tax year 2014-15.

(2) For that tax year—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Finance BillPage 2

(c) the additional rate is 45%.

(3) For that tax year—

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is
replaced with “£31,865”, and

(b) 5the amount specified in section 35(1) of that Act (personal allowance for
those born after 5 April 1948) is replaced with “£10,000”.

(4) Accordingly for that tax year—

(a) section 21 of that Act (indexation of limits), so far as relating to the basic
rate limit, does not apply, and

(b) 10section 57 of that Act (indexation of allowances), so far as relating to the
amount specified in section 35(1) of that Act, does not apply.

2 Basic rate limit for 2015-16 and personal allowances from 2015

(1) For the tax year 2015-16—

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is
15replaced with “£31,785”, and

(b) the amount specified in section 35(1) (personal allowance) is replaced
with “£10,500”.

(2) Accordingly, for that tax year—

(a) section 21 of that Act (indexation of limits), so far as relating to the basic
20rate limit, does not apply, and

(b) section 57 (indexation of allowances), so far as relating to the amount
specified in section 35(1), does not apply.

(3) In section 34(1)(a) of that Act (introduction), omit “, 36”.

(4) In section 35 of that Act (personal allowance for those born after 5 April 1948)—

(a) 25in subsection (1)(a), for “1948” substitute “1938”, and

(b) in the heading, for “1948” substitute “1938”.

(5) Omit section 36 of that Act (personal allowance for those born after 5 April 1938
but before 6 April 1948).

(6) In section 45(4)(b) of that Act (marriages before 5 December 2005), omit “36(2)
30or”.

(7) In section 46(4)(b) of that Act (marriages and civil partnerships on or after 5
December 2005), omit “36(2) or”.

(8) In section 57 of that Act (indexation of allowances)—

(a) in subsection (1)(a), for “1948” substitute “1938”, and

(b) 35in subsection (4) omit “36(2),”.

(9) The amendments made by subsections (3) to (8) have effect for the tax year
2015-16 and subsequent tax years.

3 The starting rate for savings and the savings rate limit

(1) In section 7 of ITA 2007 (the starting rate for savings) for “10%” substitute “0%”.

(2) 40For the tax year 2015-16 the amount specified in section 12(3) of that Act
(starting rate limit for savings) is replaced with “£5,000”.

Finance BillPage 3

(3) Accordingly section 21 of that Act (indexation of limits), so far as relating to the
starting rate limit for savings, does not apply for that tax year.

(4) In section 852 of that Act (power to make regulations disapplying duty to
deduct sums representing income tax), in subsection (2)(a), after “made” insert
5“or is unlikely to be liable to pay any income tax on that person’s savings
income for that tax year”.

(5) The amendments made by subsections (1) and (4) have effect for the tax year
2015-16 and subsequent tax years.

4 Indexation of limits and allowances under ITA 2007

(1) 10ITA 2007 is amended as follows.

(2) In section 21 (indexation of the basic rate limit and starting rate limit for
savings)—

(a) in each of subsections (1), (3) and (3A), for “retail prices index”
substitute “consumer prices index”, and

(b) 15after subsection (5) insert—

(6) In this section “consumer prices index” means the all items
consumer prices index published by the Statistics Board.

(3) In section 57 (indexation of allowances)—

(a) in each of subsections (2), (3) and (4), for “retail prices index” substitute
20“consumer prices index”, and

(b) after subsection (6) insert—

(7) In this section “consumer prices index” means the all items
consumer prices index published by the Statistics Board.

(4) The amendments made by subsections (2) and (3) have effect for the tax year
252015-16 and subsequent tax years.

Corporation tax

5 Charge for financial year 2015

Corporation tax is charged for the financial year 2015.

6 Small profits rate and fractions for financial year 2014

(1) 30For the financial year 2014 the small profits rate is—

(a) 20% on profits of companies other than ring fence profits, and

(b) 19% on ring fence profits of companies.

(2) For the purposes of Part 3 of CTA 2010, for that year—

(a) the standard fraction is 1/400th, and

(b) 35the ring fence fraction is 11/400ths.

(3) In subsection (1) “ring fence profits” has the same meaning as in Part 8 of that
Act (see section 276 of that Act).

Finance BillPage 4

7 Rates for ring fence profits and abolition of small profits rate for non-ring
fence profits

Schedule 1—

(a) sets the corporation tax rates for ring fence profits for the financial year
52015 and future years, and

(b) contains provision about the abolition of the small profits rate for
profits other than ring fence profits.

Capital gains tax

8 Annual exempt amount for 2014-15

(1) 10For the tax year 2014-15 the amount specified in section 3(2) of TCGA 1992
(annual exempt amount) is replaced with “£11,000”.

(2) Accordingly section 3(3) of that Act (indexation of annual exempt amount)
does not apply for that tax year.

9 Annual exempt amount for 2015-16 onwards

(1) 15For the tax year 2015-16 and subsequent tax years the amount specified in
section 3(2) of TCGA 1992 (annual exempt amount) is replaced with “£11,100”.

(2) Section 3(3) of that Act (indexation of annual exempt amount) does not apply
in relation to the tax year 2015-16 (but subsection (1) does not override section
3(3) of that Act for subsequent tax years).

20Capital allowances

10 Temporary increase in annual investment allowance

(1) In relation to expenditure incurred during the period beginning with the start
date and ending with 31 December 2015, section 51A of CAA 2001 (entitlement
to annual investment allowance) has effect as if in subsection (5) the amount
25specified as the maximum allowance (which in the absence of this section
would be £250,000 in relation to expenditure incurred before 1 January 2015
and £25,000 in relation to expenditure incurred on or after that date) were
£500,000.

(2) Schedule 2 contains—

(a) 30provision about chargeable periods which straddle the start date or 1
January 2016, and

(b) amendments of FA 2013.

(3) In this section and that Schedule “the start date” means—

(a) for corporation tax purposes, 1 April 2014, and

(b) 35for income tax purposes, 6 April 2014.

Finance BillPage 5

CHAPTER 2 Income tax: general

Exemptions and reliefs

11 Tax relief for married couples and civil partners

(1) ITA 2007 is amended as set out in subsections (2) to (8).

(2) 5After section 55 insert—

CHAPTER 3A Transferable tax allowance for married couples and civil partners
Introduction
55A Tax reduction under Chapter

(1) 10This Chapter contains provisions about the entitlement of a spouse or
civil partner to a tax reduction in a case where the other party to the
marriage or civil partnership has elected for a reduced personal
allowance.

(2) A tax reduction under this Chapter is given effect at Step 6 of the
15calculation in section 23.

(3) For the effect of section 809B (claim for remittance basis to apply)
applying to an individual for a tax year, see section 809G (no
entitlement to tax reduction).

Tax reduction
55B 20Tax reduction: entitlement

(1) An individual is entitled to a tax reduction for a tax year of the
appropriate percentage of the transferable amount if the conditions in
subsection (2) are met.

(2) The conditions are that—

(a) 25the individual is married to, or in a civil partnership with, a
person who makes an election under section 55C for the
purposes of this section which is in force for the tax year (“the
individual’s spouse or civil partner”),

(b) the individual is not, for the tax year, liable to tax at a rate other
30than the basic rate, the dividend ordinary rate or the starting
rate for savings,

(c) the individual meets the requirements of section 56 (residence)
for the tax year, and

(d) neither the individual nor the individual’s spouse or civil
35partner makes a claim for the tax year under section 45 (married
couple’s allowance: marriages before 5 December 2005) or

Finance BillPage 6

section 46 (married couple’s allowance: marriages and civil
partnerships on or after 5 December 2005).

(d)(d)neither the individual nor the individual’s spouse or civil
partner makes a claim for the tax year under section 45 (married
5couple’s allowance: marriages before 5 December 2005) or

Finance BillPage 7

(d)(d)section 46 (married couple’s allowance: marriages and civil
partnerships on or after 5 December 2005).

(3) “The appropriate percentage” is the basic rate at which the individual
would be charged to income tax for the tax year to which the reduction
5relates.

(4) “The transferable amount”—

(a) for the tax year 2015-16, is £1,050, and

(b) for the tax year 2016-17 and subsequent tax years, is 10% of the
amount of personal allowance specified in section 35(1) for the
10tax year to which the reduction relates.

(5) If the transferable amount calculated in accordance with subsection
(4)(b) would otherwise not be a multiple of £10, it is to be rounded up
to the nearest amount which is a multiple of £10.

(6) If an individual is entitled to a tax reduction under subsection (1), the
15personal allowance to which the individual’s spouse or civil partner is
entitled under section 35 or 37 is reduced for the tax year by the
transferable amount.

(7) If an individual who is entitled to a tax reduction for a tax year under
subsection (1) dies during that tax year, subsection (6) is to be ignored
20(but this does not affect the individual’s entitlement to the tax
reduction).

Election to reduce personal allowance
55C Election to reduce personal allowance

(1) An individual may make an election for the purposes of section 55B if—

(a) 25the individual is married to, or in a civil partnership with, the
same person—

(i) for the whole or part of the tax year concerned, and

(ii) when the election is made,

(b) the individual is entitled to a personal allowance under section
3035 or 37 for that tax year,

(c) assuming the individual’s personal allowance was reduced as
set out in section 55B(6), the individual would not for that year
be liable to tax at a rate other than the basic rate, the dividend
ordinary rate or the starting rate for savings, and

(d) 35where the individual meets the requirements of section 56
(residence) for the tax year by reason of meeting the condition
in subsection (3) of that section, the individual meets the
condition in subsection (2) of this section.

(2) The condition is that the individual’s hypothetical net income for the
40tax year concerned is less than the amount of the personal allowance to
which the individual is entitled for that tax year under section 35 or 37.

(3) For the purposes of subsection (2), an individual’s “hypothetical net
income” is the amount that would be that individual’s net income
calculated at Step 2 of section 23 if that individual’s income tax liability
45were calculated on the basis that the individual—

Finance BillPage 8

(a) was UK resident for the tax year concerned (and the year was
not a split year),

(b) was domiciled in the United Kingdom for that tax year,

(c) in that tax year, did not fall to be regarded as resident in a
5country outside the United Kingdom for the purposes of double
taxation arrangements having effect at the time, and

(d) for that tax year, had made a claim for any available relief under
section 6 of TIOPA 2010 (as required by subsection (6) of that
section).

(4) 10An individual’s hypothetical net income for a tax year is, to the extent
that it is not sterling, to be calculated by reference to the average
exchange rate for the year ending on 31 March in the tax year
concerned.

55D Procedure for elections under section 55C

(1) 15An election under section 55C is to be made not more than 4 years after
the end of the tax year to which it relates.

(2) If the conditions in paragraphs (a) to (d) of section 55C(1) continue to
be met, an election continues in force in each subsequent tax year
unless—

(a) 20subsection (3) applies,

(b) the election is withdrawn, or

(c) it ceases to have effect under subsection (5).

(3) Where an election is made after the end of the tax year to which it
relates, the election has effect for the tax year to which it relates only
25(and accordingly does not continue in force for subsequent tax years
under subsection (2)).

(4) An election may be withdrawn only by a notice given by the individual
by whom the election was made.

(5) If an individual’s spouse or civil partner does not obtain a tax reduction
30under section 55B in respect of a tax year in which an election is in force
the election ceases to have effect for subsequent tax years; but this does
not prevent an individual making a further election for the purposes of
section 55B(2)(a) (whether or not in relation to the same marriage or
civil partnership).

(6) 35The withdrawal of an election under subsection (4) does not, except in
the cases dealt with by subsection (7), have effect until the tax year after
the one in which the notice is given.

(7) The withdrawal of an election under subsection (4) has effect for the tax
year in which the notice is given if—

(a) 40in a case where the individual concerned met the condition in
section 55C(1)(a) by reason of being married, the marriage has
come to an end in that tax year, or

(b) in a case where the individual concerned met the condition in
section 55C(1)(a) by reason of being in a civil partnership, the
45civil partnership has come to an end in that tax year.

(8) For the purposes of subsection (7)(a), a marriage comes to an end if any
of the following is made in respect of it—

Finance BillPage 9

(a) a decree absolute of divorce, a decree of nullity of marriage or a
decree of judicial separation, or

(b) in Scotland, a decree of divorce, a declarator of nullity or a
decree of separation.

(9) 5For the purposes of subsection (7)(b), a civil partnership comes to an
end if any of the following is made in respect of it—

(a) a dissolution order or nullity order, which has been made final,

(b) a separation order, or

(c) in Scotland, a decree of dissolution, a declarator of nullity or a
10decree of separation.

(10) A notice under subsection (4) must—

(a) be given to an officer of Revenue and Customs, and

(b) must be in the form specified by the Commissioners for Her
Majesty’s Revenue and Customs.

(11) 15Paragraph 3(1)(b) of Schedule 1A to TMA 1970 (amendment of claims
and elections) does not apply to an election under section 55C.

Supplementary
55E Limitation on number of tax reductions and elections

(1) An individual is not entitled to more than one tax reduction under
20section 55B for a tax year (regardless of whether the individual is a
party to more than one marriage or civil partnership in the tax year).

(2) An individual is not entitled to have more than one election for the
purposes of section 55B which operates for a tax year (regardless of
whether the individual is a party to more than one marriage or civil
25partnership in the tax year).

(3) In section 26 (tax reductions), in subsection (1)(a), after the entry relating to
Chapter 3 of Part 3 insert—

(4) 30In section 31 (total income: supplementary), in subsection (2), after “basic”
insert “rate”.

(5) In section 33 (overview of Part)—

(a) in subsection (3), after “partners” insert “where a party to the marriage
or civil partnership is born before 6 April 1935”,

(b) 35after that subsection insert—

(3A) Chapter 3A provides for a transferable tax allowance for
married couples and civil partners.,

(c) in subsection (4), in the opening words, for “and 3” substitute “, 3 and
3A”,

(d) 40in subsection (4)(a), after “Chapter 3” insert “or 3A”, and

(e) in subsection (4)(b), for “those allowances and tax reductions”
substitute “the allowances under Chapter 2 and tax reductions under
Chapter 3”.

Previous Next

Contents page 1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 100-109 Last page