Finance (No. 3) Bill (HL Bill 304)

Part 1 Direct taxes

Charge to tax

1 Income tax charge for tax year 2019-20

5Income tax is charged for the tax year 2019-20.

2 Corporation tax charge for financial year 2020

Corporation tax is charged for the financial year 2020.

Income tax rates, allowances and limits

3 Main rates of income tax for tax year 2019-20

For the tax year 2019-20 the main rates of income tax are as follows—

(a) the basic rate is 20%;

(b) 5the higher rate is 40%;

(c) the additional rate is 45%.

4 Default and savings rates of income tax for tax year 2019-20

(1) For the tax year 2019-20 the default rates of income tax are as follows—

(a) the default basic rate is 20%;

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

(c) the default additional rate is 45%.

(2) For the tax year 2019-20 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%;

(b) the savings higher rate is 40%;

(c) 15the savings additional rate is 45%.

5 Basic rate limit and personal allowance

(1) For the tax years 2019-20 and 2020-21, the amount specified in section 10(5) of
ITA 2007 (basic rate limit) is “£37,500”.

(2) For the tax years 2019-20 and 2020-21, the amount specified in section 35(1) of
20ITA 2007 (personal allowance) is “£12,500”.

(3) In consequence of the amendment made by subsection (2), omit section 4 of
F(No.2)A 2015 (which has effect only if the personal allowance is less than
£12,500).

(4) Omit the following (which relate to the link between the personal allowance
25and the national minimum wage)—

(a) sections 57(8), 57A and 1014(5)(b)(iia) of ITA 2007, and

(b) section 3 of F(No.2)A 2015.

(5) In consequence of the provision made by this section—

(a) section 21 of ITA 2007 (indexation of basic rate limit and starting rate
30limit for savings) does not apply in relation to the basic rate limit, and

(b) section 57 of ITA 2007 (indexation of allowances) does not apply in
relation to the amount specified in section 35(1) of that Act,

for the tax years 2019-20 and 2020-21.

6 Starting rate limit for savings for tax year 2019-20

35Section 21 of ITA 2007 (indexation) does not apply in relation to the starting
rate limit for savings for the tax year 2019-20 (so that the starting rate limit for
savings remains at £5,000 for that tax year).

Employment and social security income

7 Optional remuneration arrangements: arrangements for cars and vans

(1) ITEPA 2003 is amended as follows.

(2) In section 120A (optional remuneration arrangements: benefit of a car)—

(a) 5in subsection (3)(b), for the words from “the amount” to “year is”
substitute “the total foregone amount in connection with the car for the
tax year is”, and

(b) after subsection (3) insert—

“(4) In this section, and in section 121A, the total foregone amount
10in connection with the car for a tax year is the total of—

(a) the amount foregone (see section 69B) with respect to
the benefit of the car for that year, and

(b) the amount foregone (see section 69B) with respect to
each other benefit that—

(i) 15is connected with the car,

(ii) is provided in that year for the employee, or a
member of the employee’s household, pursuant
to optional remuneration arrangements, and

(iii) is neither the provision of a driver nor the
20provision of fuel.”

(3) In section 121A (optional remuneration arrangements: method of calculating
relevant amount)—

(a) in subsection (1), for step 1 substitute—

““Step 1

25Take the total foregone amount in connection with the car for
the tax year (see section 120A(4)).”, and”

(b) in subsection (2)—

(i) for ““amount foregone” under” substitute ““total foregone
amount” for the purposes of”, and

(ii) 30for “the benefit of the car” substitute “a benefit mentioned in
section 120A(4)(a) or (b)”.

(4) In section 132A (capital contributions by employee: optional remuneration
arrangements)—

(a) for subsection (3) substitute—

“(3) 35The amount of the deduction allowed in any tax year is found
by—

(a) first multiplying the capped amount by the appropriate
percentage, and

(b) then multiplying the result by the availability factor.”,
40and”

(b) after subsection (4) insert—

“(4A) For the purposes of subsection (3), “the availability factor” is
given by the formula—

(4B) For the purposes of subsection (4A), the car is unavailable on
10any day if the day—

(a) falls before the first day on which the car is available to
the employee,

(b) falls after the last day on which the car is available to the
employee, or

(c) 15falls within a period of 30 days or more throughout
which the car is not available to the employee.”

(5) In section 154A (optional remuneration arrangements: benefit of a van)—

(a) in subsection (2)(b), for the words from “the amount” to “section 69B)”
substitute “the total foregone amount in connection with the van”,

(b) 20in subsection (3), for step 1 substitute—

““Step 1

Take the total foregone amount in connection with the van for
the tax year.”,”

(c) in subsection (7), for “the benefit of the van” substitute “a benefit
25mentioned in subsection (8)(a) or (b)”, and

(d) after subsection (7) insert—

“(8) In this section the total foregone amount in connection with the
van for a tax year is the total of—

(a) the amount foregone (see section 69B) with respect to
30the benefit of the van for that year, and

(b) the amount foregone (see section 69B) with respect to
each other benefit that—

(i) is connected with the van,

(ii) is provided in that year for the employee, or a
35member of the employee’s household, pursuant
to optional remuneration arrangements, and

(iii) is neither the provision of a driver nor the
provision of fuel.”

(6) In section 239 (exemptions for payments and benefits relating to taxable cars,
40vans and exempt HGVs), in subsection (3)—

(a) after “by virtue of” insert “section 120A (optional remuneration
arrangements: benefit of a car),”, and

(b) before “or section 160” insert “, section 154A (optional remuneration
arrangements: benefit of a van)”.

(7) The amendments made by this section have effect for the tax year 2019-20 and
subsequent tax years.

8 Exemption for benefit in form of vehicle-battery charging at workplace

(1) In Chapter 3 of Part 4 of ITEPA 2003 (employment income: travel-related
5exemptions), after section 237 insert—

“237A Vehicle-battery charging

(1) No liability to income tax arises in respect of the provision, at or near
an employee’s workplace, of facilities for charging a battery of a vehicle
used by the employee (including a vehicle used by the employee as a
10passenger).

(2) Subsection (1) applies only if the facilities are made available generally
to the employer’s employees at that workplace.

(3) In this section—

• “facilities”—

  (a)

  15includes electricity, but

  (b)

  does not include workplace parking,

• “taxable”, in relation to a car or van, has the meaning given by
  section 239(6),

• “vehicle” means a vehicle—

  (a)

  20to which Chapter 2 applies (see section 235), and

  (b)

  which is neither a taxable car nor a taxable van, and

• “workplace parking” has the meaning given by section 237(3).”

(2) The amendment made by subsection (1) has effect for the tax year 2018-19 and
subsequent tax years.

9 25Exemptions relating to emergency vehicles

(1) Section 248A of ITEPA 2003 (emergency vehicles) is amended in accordance
with subsections (2) and (3).

(2) In subsection (1)—

(a) in paragraph (a), for “for the person’s private use” substitute “mainly
30for use for the person’s business travel”;

(b) in paragraph (b), omit “engaged in on-call”.

(3) In subsection (8)—

(a) in the opening words, omit “engaged in on-call”;

(b) in paragraph (a), for “it” substitute “the vehicle”;

(c) 35omit paragraph (b) (and the “and” before it).

(4) In section 205 of ITEPA 2003 (cost of the benefit: asset made available without
transfer), after subsection (4) insert—

“(5) Where the asset is an emergency vehicle, the expense of providing fuel
for it in a tax year is not an additional expense by virtue of subsection
40(4) so long as—

(a) the person incurring that expense incurs no expense in that tax
year in the provision of fuel for the vehicle which is used for the
employee’s private travel (“private fuel expense”), or

(b) all private fuel expense that the person does incur in that tax
5year is made good by the employee on or before 6 July following
the tax year.

(6) For the purposes of this section—

• “emergency vehicle” has the same meaning as in section 248A;

• “fuel” includes electrical energy;

• 10“private travel” means travelling the expenses of which, if
  incurred and paid by the employee, would not be deductible
  under Chapter 2 or 5 of Part 5.”

(5) The amendments made by subsections (1) to (4) have effect for the tax year
2017-18 and subsequent tax years.

(6) 15For the tax year 2017-18, the tax year 2018-19 and the tax year 2019-20, sections
205 and 205A of ITEPA 2003 (taxable benefits: assets made available without
transfer) have effect, where the asset mentioned in section 205(1)(a) is an
emergency vehicle, with the modifications in subsections (7) and (8).

(7) Section 205(1C) has effect as if—

(a) 20in paragraph (a), at the beginning, there were inserted “the private use
proportion of”;

(b) after paragraph (b), and on a new line, there were inserted—

“The private use proportion is the proportion (by miles) of travel by the
employee by the emergency vehicle in the tax year that is private
25travel.”

(8) Section 205A(2) has effect as if paragraphs (c) and (d) were omitted.

(9) For the purposes of subsection (6), “emergency vehicle” has the same meaning
as in section 248A of ITEPA 2003.

10 Exemption for expenses related to travel

(1) 30Section 289A of ITEPA 2003 (exemption for paid or reimbursed expenses) is
amended as follows.

(2) After subsection (2) insert—

“(2A) No liability to income tax arises in respect of an amount paid or
reimbursed by a person (“the payer”) to an employee (whether or not
35an employee of the payer) for expenses in the course of qualifying
travel if—

(a) the amount has been calculated and paid or reimbursed in
accordance with regulations made by the Commissioners for
Her Majesty’s Revenue and Customs,

(b) 40the payment or reimbursement is not provided pursuant to
relevant salary sacrifice arrangements, and

(c) condition C is met.”

(3) After subsection (4) insert—

“(4A) Condition C is that—

(a) the payer or another person operates a system for checking that
the employee has undertaken the qualifying travel in relation to
which the amount is paid or reimbursed, and

(b) neither the payer nor any other person operating the system
5knows or suspects, or could reasonably be expected to know or
suspect, that the travel was not undertaken.”

(4) In subsection (5)—

(a) for ““Relevant” substitute “In this section “relevant”, and

(b) before “in respect of” insert “for or”.

(5) 10After subsection (5) insert—

“(5A) In this section “qualifying travel” means travel for which a deduction
from the employee’s earnings would be allowed under Chapter 2 or 5
of Part 5.”

(6) In subsection (6), for “this section” substitute “subsection (2)”.

(7) 15In subsection (7), after “subsection” insert “(2A)(a) or”.

(8) After subsection (7) insert—

“(8) Regulations made under subsection (2A)(a) may contain provision
about calculating amounts that is framed by reference to rates (for
expenses) published from time to time by the Commissioners for Her
20Majesty’s Revenue and Customs.”

(9) The amendments made by this section have effect for the tax year 2019-20 and
subsequent tax years.

(10) For the tax year 2019-20 and subsequent tax years, the Income Tax (Approved
Expenses) Regulations 2015 (S.I. 2015/1948S.I. 2015/1948)—

(a) 25have effect as if made under section 289A(2A)(a) of ITEPA 2003 (and
may be revoked, or amended, accordingly), and

(b) have effect as if in regulation 2(1)—

(i) the reference to section 289A of ITEPA 2003 were to section
289A(2A)(a) of that Act,

(ii) 30for the words “in an approved way” there were substituted “in
accordance with these regulations”, and

(iii) the words “purchased by the employee” were omitted.

11 Beneficiaries of tax-exempt employer-provided pension benefits

(1) In section 307(2) of ITEPA 2003 (“death or retirement benefit” is a benefit for
35employee or others on employee’s retirement or death), for “or a member of the
employee’s family or household” substitute “, or paid or given in respect of the
employee to any other individual or to a charity,”.

(2) The amendment made by subsection (1) has effect for the tax year 2019-20 and
subsequent tax years.

12 40Tax treatment of social security income

(1) Part 10 of ITEPA 2003 (social security income) is amended as follows.

(2) In Table A in section 660 (taxable UK benefits), at the appropriate place insert—

(3) In section 658 (amount charged to tax), in subsection (4), after “carer’s
allowance,” insert “carer’s allowance supplement,”.

(4) 5In section 661 (taxable social security income), in subsection (1), after “carer’s
allowance,” insert “carer’s allowance supplement,”.

(5) In Part 1 of Table B in section 677(1) (UK social security benefits wholly exempt
from tax: benefits payable under primary legislation), insert each of the
following at the appropriate place—

(6) 25In the heading of Part 1 of Table B in section 677(1), after “Northern Ireland
welfare supplementary payments” insert “etc”.

(7) In Part 2 of Table B in section 677(1) (UK social security benefits wholly exempt
from tax: benefits payable under regulations), insert each of the following at
the appropriate place—

(8) 35In Part 1 of Schedule 1 to ITEPA 2003 (abbreviations of Acts and instruments),
insert each of the following at the appropriate place—

Chargeable gains: interests in UK land etc

13 Disposals by non-UK residents etc

(1) 10Schedule 1 substitutes a new Part 1 of TCGA 1992 which—

(a) extends the cases in which gains accruing to persons not resident in the
United Kingdom are chargeable to tax, and

(b) abolishes the specific charge to tax on ATED-related chargeable gains.

(2) Schedule 1 also—

(a) 15repeals other provisions contained in the previous version of Part 1 of
TCGA 1992 or in Part 2 of that Act and restates their effect in rewritten
form (whether in the new Part 1 or elsewhere),

(b) makes provision in relation to collective investment vehicles that
(directly or indirectly) hold interests in land in the United Kingdom,
20and

(c) makes provision connected with the matters mentioned in subsection
(1) or this subsection.

14 Disposals of UK land etc: payments on account of capital gains tax

(1) Schedule 2 makes provision for the purposes of capital gains tax requiring
25returns, and payments on account of that tax, to be made where there is—

(a) any direct or indirect disposal of UK land which meets the non-
residence condition (whether or not a gain accrues), or

(b) any other direct disposal of UK land on which a residential property
gain accrues.

(2) 30Subsection (1) is to be read as if contained in Part 1 of that Schedule.

International matters

15 Offshore receipts in respect of intangible property

Schedule 3 contains provision about offshore receipts in respect of intangible
property.

16 35Avoidance involving profit fragmentation arrangements

Schedule 4 contains provision about profit fragmentation arrangements.