Finance (No. 2) Bill (HL Bill 156)

Part 1 Direct taxes

CHAPTER 1 Charge and principal rates

Income tax charge and rates

1 5Income tax charge for tax year 2017-18

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

2 Main rates of income tax for tax year 2017-18

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%;

(c) the additional rate is 45%.

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

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

(a) 5the default basic rate is 20%;

(b) the default higher rate is 40%;

(c) the default additional rate is 45%.

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

(a) the savings basic rate is 20%;

(b) 10the savings higher rate is 40%;

(c) the savings additional rate is 45%.

4 Starting rate limit for savings for tax year 2017-18

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

(2) 15The 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).

5 20Dividend nil rate for tax year 2018-19 etc

(1) In section 13A of ITA 2007 (income charged at the divided nil rate), for “£5000”,
in each place, substitute “£2000”.

(2) The amendments made by this section have effect for the tax year 2018-19 and
subsequent tax years.

25Corporation tax charge

6 Corporation tax charge for financial year 2018

Corporation tax is charged for the financial year 2018.

CHAPTER 2 Income tax

Employment income

7 30Workers’ services provided to public sector through intermediaries

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

8 Optional remuneration arrangements

Schedule 2 makes provision about optional remuneration arrangements.

9 Taxable benefits: time limit for making good

(1) Part 3 of ITEPA 2003 (employment income: earnings and benefits etc treated as
5earnings) is amended as follows.

(2) In section 87 (cash equivalent of benefit of non-cash voucher)—

(a) in subsection (2)(b), for “to the person incurring it” substitute “, to the
person incurring it, on or before 6 July following the relevant tax year”,
and

(b) 10after subsection (2) insert—

“(2A) If the voucher is a non-cash voucher other than a cheque
voucher, the relevant tax year is—

(a) the tax year in which the cost of provision is incurred, or

(b) if later, the tax year in which the employee receives the
15voucher.

(2B) If the voucher is a cheque voucher, the relevant tax year is the
tax year in which the voucher is handed over in exchange for
money, goods or services.””

(3) In section 88(3) (time at which cheque voucher treated as handed over), at the
20beginning insert “For the purposes of subsection (2) and sections 87(2B) and
87A(6),”.

(4) In section 94(2) (cash equivalent of benefit of credit-token), in paragraph (b), for
the words from “employee” to the end substitute “employee—

(i) to the person incurring it, and

(ii) 25on or before 6 July following the tax year which contains
the occasion in question.””

(5) In section 105(2) (cash equivalent of benefit of living accommodation costing
£75,000 or less), in paragraph (b), after “made good” insert “, on or before 6 July
following the tax year which contains the taxable period,”.

(6) 30In section 106(3) (cash equivalent of benefit of living accommodation costing
over £75,000), in paragraph (a), for the words from “paid” to “exceeds”
substitute “paid—

by the employee,

(ii) in respect of the accommodation,

(iii) 35to the person providing it, and

(iv) on or before 6 July following the tax year which contains
the taxable period,

exceeds”.”

(7) In section 144 (deduction for payments for private use of car)—

(a) 40in subsection (1)(b), for “in” substitute “on or before 6 July following”,

(b) in subsection (2), after “paid” insert “as mentioned in subsection (1)(b)”,
and

(c) in subsection (3), after “paid” insert “as mentioned in subsection (1)(b)”.

(8) In section 151(2) (when cash equivalent of benefit of car fuel is nil)—

(a) in the words before paragraph (a) omit “in the tax year in question”,

(b) in paragraph (a), at the beginning insert “in the tax year in question,”,
and

(c) in paragraph (b), at the end insert “on or before 6 July following that tax
5year”.

(9) In section 152(2) (car fuel: proportionate reduction of cash equivalent)—

(a) in the words before paragraph (a) omit “for any part of the tax year in
question”,

(b) in paragraph (a), at the beginning insert “for any part of the tax year in
10question,”,

(c) in paragraph (b), at the beginning insert “for any part of the tax year in
question,”, and

(d) in paragraph (c)—

(i) after “employee”, in the first place it occurs, insert “—

(i) 15for any part of the tax year in question,”,
and”

(ii) for “and the employee does make good that expense” substitute
“, and

“(ii) the employee does make good that
20expense on or before 6 July following that
tax year”.”

(10) In section 158 (reduction for payments for private use of van)—

(a) in subsection (1)(b), for “in” substitute “on or before 6 July following”,

(b) in subsection (2), after “paid” insert “as mentioned in subsection (1)(b)”,
25and

(c) in subsection (3), after “paid” insert “as mentioned in subsection (1)(b)”.

(11) In section 162(2) (when cash equivalent of benefit of van fuel is nil)—

(a) in the words before paragraph (a) omit “in the tax year in question”,

(b) in paragraph (a), at the beginning insert “in the tax year in question,”,
30and

(c) in paragraph (b), at the end insert “on or before 6 July following that tax
year”.

(12) In section 163(3) (van fuel: proportionate reduction of cash equivalent)—

(a) in the words before paragraph (a) omit “for any part of the tax year in
35question”,

(b) in paragraph (a), at the beginning insert “for any part of the tax year in
question,”,

(c) in paragraph (b), at the beginning insert “for any part of the tax year in
question,”, and

(d) 40in paragraph (c)—

(i) after “employee”, in the first place it occurs, insert “—

(i) for any part of the tax year in question,”,
and”

(ii) for “and the employee does make good that expense” substitute
45“, and

“(ii) the employee does make good that
expense on or before 6 July following that
tax year”.”

(13) In section 203(2) (cash equivalent of benefit treated as earnings), for “to the
persons providing the benefit” substitute “, to the persons providing the
benefit, on or before 6 July following the tax year in which it is provided”.

(14) The amendments made by this section have effect for the purpose of
5calculating income tax charged for the tax year 2017-18 or any subsequent tax
year.

10 Taxable benefits: ultra-low emission vehicles

(1) ITEPA 2003 is amended as follows.

(2) In section 139 (car with a CO₂ emissions figure: the appropriate percentage),
10for subsections (1) to (6) substitute—

“(1) The appropriate percentage for a year for a car with a CO₂ emissions
figure of less than 75 is determined in accordance with the following
table.

(2) For the purposes of subsection (1) and the table, if a CO₂ emissions
figure or an electric range figure is not a whole number, round it down
to the nearest whole number.

(3) 30The appropriate percentage for a year for a car with a CO₂ emissions
figure of 75 or more is whichever is the lesser of—

(a) 20% plus one percentage point for each 5 grams per kilometre
driven by which the CO₂ emissions figure exceeds 75, and

(b) 37%.

(4) 35For the purposes of subsection (3), if a CO₂ emissions figure is not a
multiple of 5, round it down to the nearest multiple of 5.

(5) In this section, an “electric range figure” is the number of miles which
is the equivalent of the number of kilometres specified in an EC
certificate of conformity, an EC type-approval certificate or a UK
approval certificate on the basis of which a car is registered, as being the
5maximum distance for which the car can be driven in electric mode
without recharging the battery.””

(3) In section 140 (car without a CO₂ emissions figure: the appropriate
percentage)—

(a) in subsection (2), in the table —

(i) 10for “23%” substitute “24%”, and

(ii) for “34%” substitute “35%”;

(b) in subsection (3)(a), for “16%” substitute “2%”.

(4) In section 142(2) (car first registered before 1 January 1998: the appropriate
percentage), in the table—

(a) 15for “23%” substitute “24%”, and

(b) for “34%” substitute “35%”.

(5) Omit subsection 170(3).

(6) The amendments made by this section have effect for the tax year 2020-21 and
subsequent tax years.

11 20Taxable benefits: asset made available without transfer

(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) 25the 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
30household.

(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) 35at 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) 40The 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
45private 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”

(c) in subsection (2), in the words before paragraph (a), for “cost of the
5taxable” substitute “annual cost of the”.

(3) After section 205 insert—

“205A Deduction for periods when asset unavailable for private use

(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
10day 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) 15that 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) 20could 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
25household, 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) 30uses 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—

35

(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
45property 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 5Reduction of cost of taxable benefit where asset is shared

(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,
10the 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
15amount 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) 20in 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) 25in subsection (3), for “sections 204 to 206” substitute “section 204 or
206”, and

(c) in the heading, for “employment-related benefit” substitute “certain
employment-related benefits”.

(5) The amendments made by this section have effect for the tax year 2017-18 and
30subsequent tax years.

12 Pensions advice

(1) In Chapter 9 of Part 4 of ITEPA 2003, after section 308B insert—

“308C Provision of pensions advice: limited exemption

(1) No liability to income tax arises in respect of—

(a) 35the provision of relevant pensions advice to an employee or
former or prospective employee, or

(b) the payment or reimbursement of costs incurred, by or in
respect of an employee or former or prospective employee, in
obtaining relevant pensions advice,

40if Condition A or B is met.

(2) But subsection (1) does not apply in relation to a person in a tax year so
far as the value of the exemption in the person’s case in that year
exceeds £500.

(3) The “value of the exemption”, in relation to a person and a tax year, is
the amount exempted by subsection (1) from income tax in the person’s
case in that year, disregarding subsection (2) for this purpose.

(4) If in a tax year there is in relation to an individual more than one person
5who is an employer or former employer, subsections (1) to (3) apply in
relation to the individual as employee or former or prospective
employee of any one of those persons separately from their application
in relation to the individual as employee or former or prospective
employee of any other of those persons.

(5) 10“Relevant pensions advice”, in relation to a person, means information,
or advice, in connection with—

(a) the person’s pension arrangements, or

(b) the use of the person’s pension funds.

(6) Condition A is that the relevant pensions advice, or payment or
15reimbursement, is provided under a scheme that is open—

(a) to the employer’s employees generally, or

(b) generally to the employer’s employees at a particular location.

(7) Condition B is that the relevant pensions advice, or payment or
reimbursement, is provided under a scheme that is open generally to
20the employer’s employees, or generally to those of the employer’s
employees at a particular location, who—

(a) have reached the minimum qualifying age, or

(b) meet the ill-health condition.

(8) The “minimum qualifying age”, in relation to an employee, means the
25employee’s relevant pension age less 5 years.

(9) “Relevant pension age”, in relation to an employee, means—

(a) where paragraph 22 or 23 of Schedule 36 to FA 2004 applies in
relation to the employee and a registered pension scheme of
which the employee is a member, the employee’s protected
30pension age (see paragraph 22(8) and 23(8) of Schedule 36 to FA
2004), or

(b) in any other case, the employee’s normal minimum pension
age, as defined by section 279(1) of FA 2004.

(10) The “ill-health condition” is met by an employee if the employer is
35satisfied, on the basis of evidence provided by a registered medical
practitioner, that the employee is (and will continue to be) incapable of
carrying on his or her occupation because of physical or mental
impairment.””

(2) In section 228 of ITEPA 2003 (effect of exemptions on liability under provisions
40outside Part 2 of ITEPA 2003), in subsection (2), after paragraph (da) insert—

“(db) section 308C (provision of pensions advice),”.”

(3) Regulation 5 of the Income Tax (Exemption of Minor Benefits) Regulations
2002 (S.I. 2002/205S.I. 2002/205) (exemption in respect of the provision of pensions advice)
is revoked.

(4) 45In regulation 2 of the Income Tax (Exemption of Minor Benefits) (Amendment)
Regulations 2004 (S.I. 2004/3087S.I. 2004/3087) omit the inserted regulation 5.