Finance Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Charges, rates etc
1

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
Charges, rates etc
Income tax
1
Charge, main rates, thresholds and allowances etc for 2010-11
(1)
Income tax is charged for the tax year 2010-11.
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(2)
For that tax year—
(a)
the basic rate is 20%,
(b)
the higher rate is 40%, and
(c)
the additional rate is 50%.
(3)
The amounts specified in the following provisions of ITA 2007 are the same for
10
the tax year 2010-11 as for the tax year 2009-10—
(a)
sections 10(5) and 12(3) (basic rate limit and starting rate limit for
savings),

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Part 1 — Charges, rates etc
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(b)
sections 35, 36(1), 37(1) and 38(1) (personal allowances and blind
person’s allowance),
(c)
sections 43, 45(3)(a) and (b) and 46(3)(a) and (b) (tax reductions for
married couples and civil partners), and
(d)
sections 36(2), 37(2), 45(4) and 46(4) (adjusted net income limit).
5
Corporation tax
2
Charge and main rate for financial year 2011
(1)
Corporation tax is charged for the financial year 2011.
(2)
For that year the rate of corporation tax is—
(a)
28% on profits of companies other than ring fence profits, and
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(b)
30% on ring fence profits of companies.
(3)
In subsection (2) “ring fence profits” has the same meaning as in Part 8 of CTA
2010 (see section 276 of that Act).
3
Small profits rates and fractions for financial year 2010
(1)
For the financial year 2010 the small profits rate is—
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(a)
21% 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 7/400ths, and
(b)
the ring fence fraction is 11/400ths.
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(3)
In subsection (1) “ring fence profits” has the same meaning as in Part 8 of CTA
2010 (see section 276 of that Act).
Capital gains tax
4
Increase in entrepreneurs’ relief
(1)
In section 169N(3) of TCGA 1992 (limit on entrepreneurs’ relief)—
25
(a)
for “£1 million” (in both places) substitute “£2 million”, and
(b)
in paragraph (b), after “total of” insert “so much of” and insert at the
end “as was subject to reduction under subsection (2)”.
(2)
The amendments made by subsection (1) have effect in relation to qualifying
business disposals occurring on or after 6 April 2010.
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Capital allowances
5
Annual investment allowance
(1)
In section 51A(5) of CAA 2001 (entitlement to annual investment allowance:
maximum allowance), for “£50,000” substitute “£100,000”.
(2)
The amendment made by subsection (1) has effect in relation to expenditure
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incurred on or after the relevant date.

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(3)
Subsections (4) and (5) apply in relation to a chargeable period (“the actual
chargeable period”) which—
(a)
begins before the relevant date, and
(b)
ends on or after that date.
(4)
The maximum allowance under section 51A of CAA 2001 for the actual
5
chargeable period is the sum of each maximum allowance that would be found
if—
(a)
the period beginning with the first day of the chargeable period and
ending with the day before the relevant date, and
(b)
the period beginning with the relevant date and ending with the last
10
day of the chargeable period,

were treated as separate chargeable periods.
(5)
But, so far as concerns expenditure incurred before the relevant date, the
maximum allowance under section 51A of that Act for the actual chargeable
period is to be calculated as if the amendment made by subsection (1) had not
15
been made.
(6)
In this section “the relevant date” means—
(a)
for corporation tax purposes, 1 April 2010, and
(b)
for income tax purposes, 6 April 2010.
Stamp duty land tax
20
6
Relief for first-time buyers
(1)
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
(2)
After section 57A insert—
“57AA
First-time buyers
(1)
A land transaction is exempt from charge under section 55 if—
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(a)
it is a relevant acquisition of a major interest in land,
(b)
the land consists entirely of residential property,
(c)
the relevant consideration (see section 55) for the transaction
(other than any consisting of rent) is more than £125,000 but not
more than £250,000,
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(d)
the purchaser, or (if more than one) each of the purchasers, is a
first-time buyer who intends to occupy the residential property
as the purchaser’s only or main residence, and
(e)
(subject to subsection (4)) the transaction is not one of a number
of linked transactions.
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(2)
In this section “first-time buyer” means a person who—
(a)
has not previously been a purchaser in relation to a relevant
acquisition of a major interest in land which consisted of or
included residential property,
(b)
has not previously acquired an equivalent interest in such land
40
under the law of a territory outside the United Kingdom,
(c)
has not previously been, or been one of the persons who was,
“the person” for the purposes of section 71A, 72, 72A or 73 in a
case where the first transaction within the meaning of the

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section concerned was a relevant acquisition of a major interest
in land which consisted of or included residential property, and
(d)
would not have been such a person for those purposes in such
a case if the provisions mentioned in paragraph (c) had been in
force, and had had effect in the territory concerned, at all
5
material times (subject, where required, to appropriate
modifications).
(3)
In this section “relevant acquisition of a major interest in land” means
an acquisition of a major interest in land other than—
(a)
the grant of a lease for a term of less than 21 years, or
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(b)
the assignment of a lease which has less than 21 years to run.
(4)
Subsection (1)(e) does not prevent a transaction being exempt from
charge under section 55 if each of the linked transactions is one the
subject-matter of which is land, or an interest in or right over land,
which falls within section 116(1)(a), (b) or (c) by reason of its connection
15
with the same building.”
(3)
After section 73C insert—
“73CA
Sections 71A to 73: first-time buyers
(1)
Where section 71A, 72, 72A or 73 applies, the first transaction within the
meaning of the section concerned is exempt from charge under section
20
55 if—
(a)
the transaction is a relevant acquisition of a major interest in
land,
(b)
the land consists entirely of residential property,
(c)
the relevant consideration (see section 55) for the transaction
25
(other than any consisting of rent) is more than £125,000 but not
more than £250,000,
(d)
the person (within the meaning of the section concerned), or (if
more than one) each of them, is a first-time buyer who intends
to occupy the residential property as the person’s only or main
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residence, and
(e)
(subject to subsection (3)) the transaction is not one of a number
of linked transactions.
(2)
In subsection (1)—
“first-time buyer”, and
35
“relevant acquisition of a major interest in land”,

have the same meaning as in section 57AA.
(3)
Subsection (4) of section 57AA applies for the purposes of this section.”
(4)
In section 110 (approval of regulations under general power), insert at the
end—
40
“(6)
This section does not apply to regulations containing only provision
varying section 57AA or 73CA, or paragraph 15 of Schedule 9, which
does not increase any person’s liability to tax.”

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(5)
In Schedule 9 (right to buy, shared ownership leases etc), insert at the end—
“First-time buyers
15    (1)
This paragraph applies where—
(a)
a lease is granted as mentioned in sub-paragraph (1)(a) of
paragraph 2 and the conditions in sub-paragraph (2) of that
5
paragraph are met but no election is made for tax to be
charged in accordance with that paragraph,
(b)
a lease is granted as mentioned in sub-paragraph (1)(a) of
paragraph 4 and the conditions in sub-paragraph (2) of that
paragraph are met but no election is made for tax to be
10
charged in accordance with that paragraph,
(c)
paragraph 4A applies in relation to the acquisition of an
interest (but the acquisition is not exempt from charge by
virtue of sub-paragraph (2) of that paragraph),
(d)
a shared ownership trust is declared but no election is made
15
for tax to be charged in accordance with paragraph 9, or
(e)
an equity-acquisition payment is made under a shared
ownership trust (but the equity-acquisition payment, and the
consequential increase in the purchaser’s beneficial interest,
are not exempt from charge by virtue of paragraph 10).
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      (2)
Neither section 57AA nor section 73CA applies in relation to—
(a)
the acquisition of the lease,
(b)
the acquisition of the interest,
(c)
the declaration of the shared ownership trust, or
(d)
the equity-acquisition payment and the consequential
25
increase in the purchaser’s beneficial interest.”
(6)
The amendments made by this section have effect in relation to any land
transaction of which the effective date is on or after 25 March 2010 but before
25 March 2012.
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Rate in respect of residential property where consideration over £1m
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(1)
In section 55(2) of FA 2003 (amount of SDLT chargeable), in Table A (bands and
percentages for residential property), for the final entry (cases where relevant
consideration is more than £500,000 to be chargeable at 4%) substitute—

“More than £500,000 but not more than £1,000,000
    4%

More than £1,000,000
    5%”.

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(2)
The amendment made by subsection (1) has effect in relation to any land
transaction of which the effective date is on or after 6 April 2011.
(3)
But that amendment does not have effect in relation to any transaction—
(a)
effected in pursuance of a contract entered into and substantially
performed before 25 March 2010, or
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(b)
effected in pursuance of a contract entered into before that date and not
excluded by subsection (4).

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(4)
A transaction effected in pursuance of a contract entered into before 25 March
2010 is excluded by this subsection if—
(a)
there is any variation of the contract, or assignment (or assignation) of
rights under the contract, on or after 25 March 2010,
(b)
the transaction is effected in consequence of the exercise on or after that
5
date of any option, right of pre-emption or similar right, or
(c)
on or after that date there is an assignment (or assignation), subsale or
other transaction relating to the whole or part of the subject-matter of
the contract as a result of which a person other than the purchaser
under the contract becomes entitled to call for a conveyance.
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Inheritance tax
8
Rate bands
(1)
The Table substituted in Schedule 1 to IHTA 1984 by section 155(1)(b) and (4)
of FA 2006 (which provides for a rate of nil per cent on such portion of the value
concerned as does not exceed £325,000 and a rate of 40 per cent on such portion
15
as exceeds that amount) has effect in relation to chargeable transfers made on
or after 6 April 2010.
(2)
Accordingly, omit—
(a)
in IHTA 1984, the Table substituted in Schedule 1 in relation to
chargeable transfers made on or after that date (which provided for a
20
rate of nil per cent on such portion of the value concerned as does not
exceed £350,000 and a rate of 40 per cent on such portion as exceeds that
amount), and
(b)
in FA 2007, section 4 (which substituted it).
(3)
Section 8 of IHTA 1984 (indexation) does not have effect by virtue of any
25
difference between the retail prices index for the month of September in 2010,
2011, 2012 or 2013 and the previous September.
Alcohol and tobacco
9
Rates of alcoholic liquor duties
(1)
ALDA 1979 is amended as follows.
30
(2)
In section 5 (rate of duty on spirits), for “£22.64” substitute “£23.80”.
(3)
In section 36(1AA)(a) (standard rate of duty on beer), for “£16.47” substitute
“£17.32”.
(4)
In section 62(1A) (rates of duty on cider)—
(a)
in paragraph (a) (rate of duty per hectolitre in the case of sparkling
35
cider of a strength exceeding 5.5 per cent), for “£207.20” substitute
“£217.83”,
(b)
in paragraph (b) (rate of duty per hectolitre in the case of cider of a
strength exceeding 7.5 per cent which is not sparkling cider), for
“£47.77” substitute “£54.04”, and
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(c)
in paragraph (c) (rate of duty per hectolitre in any other case), for
“£31.83” substitute “£36.01”.

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(5)
For the table in Schedule 1 substitute—
                  “Table of rates of duty on wine and made-wine
             Part 1
                     Wine or made-wine of a strength not exceeding 22 per cent


Rates of duty per

5

Description of wine or made-wine
hectolitre

£

Wine or made-wine of a strength not
69.32

exceeding 4 per cent

Wine or made-wine of a strength exceeding
95.33

10

4 per cent but not exceeding 5.5 per cent

Wine or made-wine of a strength exceeding
225.00

5.5 per cent but not exceeding 15 per cent

and not being sparkling

Sparkling wine or sparkling made-wine of a
217.83

15

strength exceeding 5.5 per cent but less than

8.5 per cent

Sparkling wine or sparkling made-wine of a
288.20

strength of 8.5 per cent or of a strength

exceeding 8.5 per cent but not exceeding 15

20

per cent

Wine or made-wine of a strength exceeding
299.97

15 per cent but not exceeding 22 per cent

     Part 2
25
                          Wine or made-wine of a strength exceeding 22 per cent


Rates of duty per litre

Description of wine or made-wine
of alcohol in wine or

made-wine

£

30

Wine or made-wine of a strength exceeding
              23.80”.

22 per cent

(6)
The amendments made by this section are treated as having come into force on
29 March 2010.
10
Rates of tobacco products duty
35
(1)
For the table in Schedule 1 to TPDA 1979 substitute—