A substantially shortened version of the UK Finance Bill received royal assent on 27 April. The government withdrew most of the provisions of the bill so that it could be passed before parliament was dissolved ahead of the general election on 8 June.
Most of the substantive provisions affecting corporate taxpayers were removed from the bill, including the corporate interest restriction rules, the reforms to the corporate loss relief rules and the reform of the substantial shareholdings exemption. These provisions were all due to take effect from 1 April 2017.
A Conservative government will press ahead with the changes that were removed from the bill after the general election if it returns to power, according to Treasury secretary Jane Ellison. She told the House of Commons: "There has been no policy change. These provisions made a significant contribution to the public finances and the government will legislate for the remaining provisions at the earliest opportunity at the start of the new parliament."
"Although we know that the provisions are likely to resurface in a post-election finance bill, what we don't know is whether they will still come into force on 1 April or whether any substantive amendments will be made before enactment," said Eloise Walker, a corporate tax expert at Pinsent Masons, the law firm behind Out-law.com.
"This causes considerable uncertainty for companies who don't know exactly how they will be taxed in their current accounting period," she said.
The Finance Act included the provisions needed for the government to have the authority to continue to collect taxes such as income tax and corporation tax from April. It also included the provisions making public sector employers responsible for ensuring that any 'off payroll' workers, including those engaged through personal service companies (PSCs), pay the correct tax.
The new rules will apply from 6 April 2017 to 'off-payroll' contractors where the contract is made through a service company. They will catch cases where the individual would have been regarded as an employee or office-holder of the public sector body had the contract been made directly with the individual. In these situations the public sector body will have responsibility for applying tax and national insurance contributions (NICs) through PAYE. An amendment was made to the definition of 'public authority' in the bill to remove some private sector businesses providing services on behalf of the NHS which were unintentionally within the scope of the new rules, as originally drafted.
The legislation introducing the soft drinks levy or 'sugar tax' was included in the Finance Act. As a result, soft drinks will be taxed based on their sugar content from April 2018.
Other changes which did not make it into the pre-election Finance Act include the non-domicile changes, which were intended to make many long term UK residents currently benefiting from non-domiciled treatment, UK domiciled from April 2017. These changes would also bring within the scope of UK inheritance tax UK residential property held by a non-domiciled individual through an offshore company. The ICAEW has published a briefing outlining what it considers to be the main problems with these provisions.
New corporate criminal offences of failing to prevent the facilitation of tax evasion are on course to be introduced in September as planned, as the Criminal Finances Bill received royal assent last week.
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