Finance Bill (HC Bill 114)

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

Income tax charge, rates etc

1 Income tax charge for tax year 2020-21

5Income tax is charged for the tax year 2020-21.

2 Main rates of income tax for tax year 2020-21

For the tax year 2020-21 the main rates of income tax are as follows—

(a)the basic rate is 20%,

(b)the higher rate is 40%, and

(c)10the additional rate is 45%.

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3 Default and savings rates of income tax for tax year 2020-21

(1)For the tax year 2020-21 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)5the default additional rate is 45%.

(2)For the tax year 2020-21 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%.

4 10Starting rate limit for savings for tax year 2020-21

Section 21 of ITA 2007 (indexation) does not apply in relation to the starting
rate limit for savings for the tax year 2020-21 (so that the starting rate limit for
savings remains at £5,000 for that tax year).

Corporation tax charge and rates

5 15Main rate of corporation tax for financial year 2020

(1)For the financial year 2020 the main rate of corporation tax is 19%.

(2)Accordingly, omit section 7(2) of F(No.2)A 2015 (which is superseded by the
provision made by subsection (1)).

6 Corporation tax: charge and main rate for financial year 2021

(1)20Corporation tax is charged for the financial year 2021.

(2)The main rate of corporation tax for that year is 19%.

Employment income and social security income

7 Determining the appropriate percentage for a car: tax year 2020-21 onwards

(1)Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) is amended as
25follows.

(2)In section 136 (car with a CO2 emissions figure: post-September 1999
registration)—

(a)in subsection (2A)—

(i)after “figure” insert “in a case where the car is first registered
30before 6 April 2020”,

(ii)for “light-duty” substitute “light”, and

(iii)for “an EC certificate of conformity” substitute “the EC
certificate of conformity or UK approval certificate”, and

(b)after subsection (2A) insert—

(2B)35For the purpose of determining the car’s CO2 emissions figure
in a case where the car is first registered on or after 6 April 2020,
ignore any values specified in the EC certificate of conformity or



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UK approval certificate that are not WLTP (worldwide
harmonised light vehicle test procedures) values.”

(3)In section 137 (car with a CO2 emissions figure: bi-fuel cars)—

(a)in subsection (2A)—

(i)5after “figure” insert “in a case where the car is first registered
before 6 April 2020”,

(ii)for “light-duty” substitute “light”, and

(iii)for “an EC certificate of conformity” substitute “the EC
certificate of conformity or UK approval certificate”, and

(b)10after subsection (2A) insert—

(2B)For the purpose of determining the car’s CO2 emissions figure
in a case where the car is first registered on or after 6 April 2020,
ignore any values specified in the EC certificate of conformity or
UK approval certificate that are not WLTP (worldwide
15harmonised light vehicle test procedures) values.”

(4)In section 139 (car with a CO2 emissions figure)—

(a)for subsection (2) substitute—

(2)For the purposes of subsection (1) and the table—

(a)if a CO2 emissions figure is not a whole number, round
20it down to the nearest whole number, and

(b)if an electric range figure is not a whole number, round
it up to the nearest whole number.”, and

(b)after subsection (5) insert—

(5A)For the purpose of determining the electric range figure for a car
25first registered before 6 April 2020, ignore any WLTP
(worldwide harmonised light vehicle test procedures) values
specified in an EC certificate of conformity, an EC type-
approval certificate or a UK approval certificate.

(5B)For the purpose of determining the electric range figure for a car
30first registered on or after 6 April 2020, ignore any values
specified in an EC certificate of conformity, an EC type-
approval certificate or a UK approval certificate that are not
WLTP (worldwide harmonised light vehicle test procedures)
values.”

(5)35The amendments made by this section have effect for the tax year 2020-21 and
subsequent tax years.

8 Determining the appropriate percentage for a car: tax year 2020-21 only

(1)For the tax year 2020-21, Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits:
cars etc) has effect with the following modifications.

(2)40In section 139 (car with a CO2 emissions figure: the appropriate percentage)—

(a)in the table in subsection (1), in the second column of the entry for a car
with a CO2 emissions figure of 0, for “2%” substitute “0%”, and

(b)in subsection (7) before paragraph (a) insert—

(za)section 139A (recently registered cars),”.

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(3)After section 139 insert—

139A Section 139: recently registered car with CO2 emissions figure

In its application in relation to a car that is first registered on or after 6
April 2020, section 139 has effect as if—

(a)5for the table in subsection (1) there were substituted—

“Car Appropriate
percentage
Car with CO2 emissions figure of 00%
Car with CO2 emissions figure of 1 - 50
10     10Car with electric range figure of 130 or more0%
     Car with electric range figure of 70 - 1293%
     Car with electric range figure of 40 - 696%
     Car with electric range figure of 30 - 3910%
     Car with electric range figure of less than 3012%
15Car with CO152 emissions figure of 51 - 54 13%
Car with CO2 emissions figure of 55 - 5914%
Car with CO2 emissions figure of 60 - 6415%
Car with CO2 emissions figure of 65 - 6916%
Car with CO2 emissions figure of 70 - 7417%”

(b)20in subsection (3)(a) for “20%” there were substituted “18%”.”

(4)In section 140 (car without a CO2 emissions figure: the appropriate percentage)
in subsection (3)(a) for “2%” substitute “0%”.

9 Determining the appropriate percentage for a car: tax year 2021-22 only

(1)For the tax year 2021-22, Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits:
25cars etc) has effect with the following modifications.

(2)In section 139 (car with a CO2 emissions figure: the appropriate percentage)—

(a)in the table in subsection (1), in the second column of the entry for a car
with a CO2 emissions figure of 0, for “2%” substitute “1%”, and

(b)in subsection (7) before paragraph (a) insert—

(za)30section 139A (recently registered cars),”.

(3)After section 139 insert—

139A Section 139: recently registered car with CO2 emissions figure

In its application in relation to a car that is first registered on or after 6
April 2020, section 139 has effect as if—

(a)35for the table in subsection (1) there were substituted—

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“Car Appropriate
percentage
Car with CO2 emissions figure of 01%
Car with CO2 emissions figure of 1 - 50
5     5Car with electric range figure of 130 or more1%
     Car with electric range figure of 70 - 1294%
     Car with electric range figure of 40 - 697%
     Car with electric range figure of 30 - 3911%
     Car with electric range figure of less than 3013%
10Car with CO102 emissions figure of 51 - 54 14%
Car with CO2 emissions figure of 55 - 5915%
Car with CO2 emissions figure of 60 - 6416%
Car with CO2 emissions figure of 65 - 6917%
Car with CO2 emissions figure of 70 - 7418%

(b)15in subsection (3)(a) for “20%” there were substituted “19%”.

(4)In section 140 (car without a CO2 emissions figure: the appropriate percentage)
in subsection (3)(a) for “2%” substitute “1%”.

10 Apprenticeship bursaries paid to persons leaving local authority care

(1)In Part 4 of ITEPA 2003 (employment income: exceptions), in Chapter 4
20(exemptions: education and training), after section 254 insert—

“Persons leaving local authority care
254A  Apprenticeship bursaries paid to persons leaving local authority care

(1)No liability to income tax arises in respect of a care leaver’s
apprenticeship bursary payment.

(2)25A care leaver’s apprenticeship bursary payment is a payment—

(a)payable out of the public revenue,

(b)to a care leaver (see subsection (3)),

(c)made in connection with the person’s employment as an
apprentice (see subsection (4)), and

(d)30in respect of which any conditions specified in regulations
made by the Treasury are met.

(3)A person is a care leaver if they are a person—

(a)who is, or was, a child looked after—

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(i)by a local authority in England within the meaning of
section 22 of the Children Act 1989 (general duty of local
authority in relation to children looked after by them);

(ii)by a local authority in Wales within the meaning of the
5Social Services and Well-being (Wales) Act 2014 (anaw
4) (see section 74 of that Act (child or young person
looked after by a local authority));

(iii)by a local authority in Scotland within the meaning of
Chapter 1 of Part 2 of the Children (Scotland) Act 1995
10(see section 17(6) of that Act (duty of local authority to
child looked after by them));

(iv)by an authority in Northern Ireland within the meaning
of the Children (Northern Ireland) Order 1995 (S.I.
1995/755 (N.I. 2)) (see Article 25 of that Order (children
15looked after by an authority: interpretation)), and

(b)in respect of whom any other conditions specified in
regulations made by the Treasury are met.

(4)“Apprentice” has the meaning specified in regulations made by the
Treasury.

(5)20Regulations under this section—

(a)may make provision framed by reference to a scheme (however
described or named), or document, as it has effect from time to
time,

(b)may make different provision for different purposes,

(c)25may make different provision for different areas, and

(d)may make retrospective provision.”

(2)The amendment made by this section has effect in relation to the tax year 2020-
21 and subsequent tax years.

11 Tax treatment of certain Scottish social security benefits

(1)30Table B in section 677(1) of ITEPA 2003 (UK social security benefits wholly
exempt from income tax) is amended as follows.

(2)In Part 1 (benefits payable under primary legislation etc), insert each of the
following at the appropriate place—

“Disability assistance for
35children and young people
SS(S)A 2018Sections 24 and 31”
“Job startETA 1973Section 2”.

(3)In Part 2 (benefits payable under regulations), insert the following at the
appropriate place—

“Scottish child paymentSS(S)A 2018Section 79”.

(4)40The amendments made by this section have effect for the tax year 2020-21 and
subsequent tax years.

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12 Power to exempt social security benefits from income tax

(1)The Treasury may by regulations amend Chapter 4 or 5 of Part 10 of ITEPA
2003 (social security benefits: exemptions) so as to provide that no liability to
income tax arises on social security benefits of a description specified in the
5regulations.

(2)Regulations under this section may make—

(a)different provision for different cases;

(b)retrospective provision;

(c)incidental or supplementary provision;

(d)10consequential provision (which may include provision amending any
provision made by or under the Income Tax Acts).

(3)In section 655 of ITEPA 2003 (structure of Part 10), in subsection (2), at the end
insert “;

  • section 12 of FA 2020 (power to exempt social security benefits
    15from income tax).”

13 Voluntary office-holders: payments in respect of expenses

(1)After section 299A of ITEPA 2003 insert—

299B Voluntary office-holders: payments in respect of expenses

(1)No liability to income tax arises in respect of a payment to a person who
20holds a voluntary office if the payment is in respect of reasonable
expenses incurred in carrying out the duties of that office.

(2)It does not matter whether—

(a)the payment is an advance payment or a reimbursement;

(b)the person who makes the payment is the person with whom
25the office is held.

(3)Subsections (2) and (3) of section 299A apply for the purposes of
subsection (1) of this section as they apply for the purposes of
subsection (1) of that section.”

(2)In section 299A(3)(a) of ITEPA 2003 (voluntary office-holders: compensation
30for lost employment income) after “payment” insert “(whether an advance
payment or a reimbursement)”.

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

Loan charge

14 35Loan charge not to apply to loans or quasi-loans made before 9 December 2010

(1)In Schedule 11 to F(No.2)A 2017 (employment income provided through third
parties: loans etc outstanding on 5 April 2019) in paragraph 1 (person to be
treated as taking a relevant step for the purposes of Part 7A of ITEPA 2003 by
reason of making a loan or quasi-loan) in sub-paragraph (1)(b) for “6 April
401999” substitute “9 December 2010”.

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(2)In Schedule 12 to F(No.2)A 2017 (trading income provided through third
parties: loans etc outstanding on 5 April 2019) in paragraph 1 (application of
sections 23A to 23H of ITTOIA 2005 in relation to certain loans and quasi-loans)
in sub-paragraph (2)(a)(i) for “6 April 1999” substitute “9 December 2010”.

(3)5Part 1 of Schedule 1 makes further amendments to F(No.2)A 2017 in
consequence of this section.

15 Election for loan charge to be split over three tax years

(1)Schedule 11 to F(No.2)A 2017 (employment income provided through third
parties: loans etc outstanding on 5 April 2019) is amended as follows.

(2)10In paragraph 1 (person to be treated as taking a relevant step for the purposes
of Part 7A of ITEPA 2003 by reason of making loan or quasi-loan)—

(a)after sub-paragraph (6) insert—

(6A)Sub-paragraph (4) is subject to paragraph 1A(5).”, and

(b)in sub-paragraph (7)—

(i)15in the words before paragraph (a) after “paragraph” insert “and
paragraph 1A”, and

(ii)in paragraph (a) for “the following provisions of this Schedule”
substitute “paragraphs 3 to 18”.

(3)After paragraph 1 insert—

(1)20This paragraph applies where—

(a)a person (“P”) is treated as taking a relevant step within
paragraph 1 (“the initial step”) by reason of making a loan or
quasi-loan, and

(b)an election has been made by A for the purposes of this
25paragraph.

(2)P is treated as taking two further relevant steps for the purposes of
Part 7A of ITEPA 2003.

(3)P is treated as taking one of the further steps on the first anniversary
of the date on which P is treated as taking the initial step.

(4)30P is treated as taking one of the further steps on the second
anniversary of the date on which P is treated as taking the initial step.

(5)For the purposes of section 554Z3(1) of ITEPA 2003 (value of relevant
step), the initial step and each of the further steps is to be treated as
involving a sum of money equal to one third of the amount of the
35loan or quasi-loan that is outstanding at the time P is treated as
taking the initial step.

(6)References in this Schedule and in Part 7A of ITEPA 2003 to a
relevant step within paragraph 1A of this Schedule are to be read as
references to a relevant step which a person is treated by this
40paragraph as taking.

(7)An election for the purposes of this paragraph—

(a)may be made at any time before 1 October 2020, and

(b)may be made at a later time if an officer of Revenue and
Customs allows it.

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(8)But a person who is under a duty imposed by paragraph 35C of this
Schedule or paragraph 22 of Schedule 12 may not make an election
for the purposes of this paragraph until that duty has been complied
with.

(9)5An election for the purposes of this paragraph may not be revoked.

(10)A person who has made an election for the purposes of paragraph
1(3A) of Schedule 12 is to be treated as having made an election for
the purposes of this paragraph.”

(4)Schedule 12 to F(No.2)A 2017 (trading income provided through third parties:
10loans etc outstanding on 5 April 2019) is amended as follows.

(5)In paragraph 1 (application of sections 23A to 23H of ITTOIA 2005 in relation
to certain loans and quasi-loans)—

(a)in sub-paragraph (1) for the words from “as a” to the end substitute “for
the purposes of sections 23A to 23H of ITTOIA 2005 as a relevant
15benefit that arises immediately before the end of 5 April 2019.”,

(b)in sub-paragraph (3)—

(i)in the words before paragraph (a), after “applies” insert “and T
has not made an election for the purposes of sub-paragraph
(3A)”,

(ii)20in paragraph (a) for the words from “immediately” to the end
substitute “at the time the relevant benefit is treated as arising,
and”, and

(iii)for paragraphs (b) and (c) substitute—

(b)where T ceases to carry on the relevant trade
25before the tax year in which the relevant
benefit is treated as arising, as if section
23E(1)(b) were omitted and as if section 23E(1)
provided that the relevant benefit amount is
treated for income tax purposes as a post-
30cessation receipt of the trade received in that
tax year.”, and

(c)after sub-paragraph (3) insert—

(3A)Where section 23E of ITTOIA 2005 applies in relation to a
relevant benefit which is a loan or quasi-loan in relation to
35which sub-paragraph (2) applies and T has made an election
for the purposes of this sub-paragraph, section 23E has
effect—

(a)as if the “relevant benefit amount” were one third of
the amount of the loan or quasi-loan that is
40outstanding at the time the relevant benefit is treated
as arising,

(b)as if section 23E(1)(a) specified the tax year in which
the relevant benefit is treated as arising and each of
the two subsequent tax years, and

(c)45where T ceases to carry on the relevant trade before
any tax year so specified in section 23E(1)(a), as if
section 23E(1)(b) were omitted and as if section 23E(1)
provided that the relevant benefit amount is to be
treated for income tax purposes as a post-cessation
50receipt of the trade received in that tax year.