Finance Bill (HL Bill 123)

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%.

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(2)Accordingly, omit section 7(2) of F(No.2)A 2015 (which is superseded by the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 Workers’ services provided through intermediaries

Schedule 1 makes provision about workers’ services provided through
25intermediaries.

8 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
follows.

(2)In section 136 (car with a CO2 emissions figure: post-September 1999
30registration)—

(a)in subsection (2A)—

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

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

(iii)35for “an EC certificate of conformity” substitute “the EC
certificate of conformity or UK approval certificate”, and

(b)after 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
5UK 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)after “figure” insert “in a case where the car is first registered
10before 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)15For 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
harmonised light vehicle test procedures) values.”

(4)20In 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
it down to the nearest whole number, and

(b)25if 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
first registered before 6 April 2020, ignore any WLTP
30(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
first registered on or after 6 April 2020, ignore any values
35specified 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)The amendments made by this section have effect for the tax year 2020-21 and
40subsequent tax years.

9 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)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 “0%”, and

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

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

(3)5After 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)for the table in subsection (1) there were substituted—

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

(4)25In section 140 (car without a CO2 emissions figure: the appropriate percentage)
in subsection (3)(a) for “2%” substitute “0%”.

10 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:
cars etc) has effect with the following modifications.

(2)30In 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)section 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)5for the table in subsection (1) there were substituted—

(b)20in 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%”.

11 Apprenticeship bursaries paid to persons leaving local authority care

(1)In Part 4 of ITEPA 2003 (employment income: exceptions), in Chapter 4
25(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)30A 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)in 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—

(i)5by 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
Social Services and Well-being (Wales) Act 2014 (anaw
104) (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
(see section 17(6) of that Act (duty of local authority to
15child 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
looked after by an authority: interpretation)), and

(b)20in 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)Regulations under this section—

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

(d)30may make retrospective provision.”

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

12 Tax treatment of certain Scottish social security benefits

(1)Table B in section 677(1) of ITEPA 2003 (UK social security benefits wholly
35exempt 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—

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

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

13 Power to exempt social security benefits from income tax

(1)5The 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
regulations.

(2)Regulations under this section may make—

(a)10different provision for different cases;

(b)retrospective provision;

(c)incidental or supplementary provision;

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

(3)15In section 655 of ITEPA 2003 (structure of Part 10), in subsection (2), at the end
insert “;

• section 13 of FA 2020 (power to exempt social security benefits
  from income tax).”

14 Voluntary office-holders: payments in respect of expenses

(1)20After 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
holds a voluntary office if the payment is in respect of reasonable
expenses incurred in carrying out the duties of that office.

(2)25It 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
the office is held.

(3)Subsections (2) and (3) of section 299A apply for the purposes of
30subsection (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
for lost employment income) after “payment” insert “(whether an advance
payment or a reimbursement)”.

(3)35The amendments made by this section have effect for the tax year 2020-21 and
subsequent tax years.

Loan charge

15 Loan 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
5treated 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
1999” substitute “9 December 2010”.

(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
10sections 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)Part 1 of Schedule 2 makes further amendments to F(No.2)A 2017 in
consequence of this section.

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

(1)15Schedule 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)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 loan or quasi-loan)—

(a)after sub-paragraph (6) insert—

“(6A)20Sub-paragraph (4) is subject to paragraph 1A(5).”, and

(b)in sub-paragraph (7)—

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

(ii)in paragraph (a) for “the following provisions of this Schedule”
25substitute “paragraphs 3 to 18”.

(3)After paragraph 1 insert—

“1A (1) This 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
30quasi-loan, and

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

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

(3)35P 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)P 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
40step), 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
loan 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
paragraph as taking.

(7)5An 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.

(8)But a person who is under a duty imposed by paragraph 35C of this
10Schedule 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)An election for the purposes of this paragraph may not be revoked.

(10)A person who has made an election for the purposes of paragraph
151(3A) of Schedule 12 is to be treated as having made an election for
the purposes of this paragraph.

(11)The Commissioners for Her Majesty’s Revenue and Customs may by
regulations provide that sub-paragraph (7)(a) applies to a specified
class of persons as if the reference to 1 October 2020 were to such
20later date as is specified.

(12)In sub-paragraph (11) “specified” means specified in the
regulations.”

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

(5)25In 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
benefit that arises immediately before the end of 5 April 2019.”,

(b)30in 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)in paragraph (a) for the words from “immediately” to the end
35substitute “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
before the tax year in which the relevant
40benefit 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-
cessation receipt of the trade received in that
45tax 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