Finance Bill 2013 - Draft Clauses 11 December 2012

The Government has today published draft Finance Bill 2013 clauses, explanatory notes, Tax Information and Impact Notes (TIINs) and other tax updates including responses to consultations.

Additional publications are available on the HM Treasury website (Opens new window).

On this page:

Main Tax Announcements

These  were included in the  announcement on 3 December, the Chancellor's Autumn Statement  on  5 December and draft Finance Bill legislation on 11 December 2012:

Some of the main tax announcements

  1. General anti-abuse rule (GAAR)
  2. Statutory residence test
  3. Disclosure of Tax Avoidance Schemes (DOTAS)
  4. Higher rate threshold
  5. Capital gains tax: annual exempt amount
  6. Inheritance tax: nil rate band
  7. Fuel duty
  8. Changes to the value of the tax exemption for employer supported childcare
  9. UK-Switzerland agreement: remittance basis
  10. Information powers
  11. Overpayment relief: limiting the effect of prevailing practice and timing of loss mistakes
  12. Building society capital instruments

1. General anti-abuse rule (GAAR)

As announced in Budget 2012, legislation will be introduced to target abusive tax avoidance schemes. Following consultation, a number of amendments have been made to the draft legislation to reflect the comments received. A Summary of Responses: A General Anti-Abuse Rule on this measure was published on 11 December 2012 and is available on the HMRC website.

The updated draft legislation sets out the procedural requirements relevant to the application of the GAAR by HMRC. This includes details of the role in this process of the GAAR Advisory Panel. The GAAR has effect in relation to any tax arrangements entered into on or after the date of Royal Assent to Finance Bill 2013.

The Government has also published on 11 December for consultation, HMRC's guidance about the GAAR which is divided into 3 parts:

Part A: Scope of the GAAR legislation (PDF 337K)

Part B: Examples of how the GAAR applies to tax arrangements (PDF 504K)

Part C: GAAR Procedure (PDF 307K)

  • It is proposed that Part A and Part B will be provided to the GAAR Advisory Panel for their consideration, review, amendment and approval, so that these parts can become approved guidance for the purposes of the GAAR legislation.  Consultation responses on parts A and B will be provided to the GAAR Advisory Panel to inform this process.
  • It is not proposed that part C relating to procedural matters should form part of the guidance formally approved by the GAAR Advisory Panel. However if consultees consider that any aspects of part C should be part of the approved guidance, these views can be reflected in consultation responses.

Comments are invited on all parts of the guidance and must be made by 6 February 2013

2. Statutory residence test

Legislation will be introduced in Finance Bill 2013 to put the rules which determine an individual's tax residence on a statutory basis. The new statutory residence test will come into force from the start of the 2013-14 tax year.

The legislation will also provide for a tax year to be split into a UK part and an overseas part in certain circumstances and contain new rules for the taxation of certain income and gains arising during a period of temporary non-residence.

HMRC has published draft guidance to assist individuals on the application of the statutory residence test and on eligibility for overseas workday relief.

Guidance Note: Overseas Workday Relief (OWR) (PDF 92K)

Guidance Note: Statutory Residence Test (SRT) (PDF 688K)

Comments are invited on all parts of the guidance, in particular on its scope and coverage, by 6 February 2013

3. Disclosure of Tax Avoidance Schemes (DOTAS)

Revisions to DOTAS were consulted on over summer 2012 as part of the 'Lifting the Lid on Tax Avoidance Schemes' consultation. Finance Bill 2013 will contain two powers for secondary legislation which will be consulted on in early 2013 alongside other changes. The Government intends to implement all the secondary legislation on a common date, later in 2013.

A Summary of Responses: Lifting the Lid on Tax Avoidance Schemes was published on 11 December 2012 and is available on the HMRC website.

4. Higher rate threshold

As announced in the Autumn Statement, the higher rate threshold for income tax will increase by 1 per cent in 2014-15 and 2015-16 to levels of £41,865 and £42,285 respectively. The higher rate threshold is the point at which an individual starts to pay income tax at the higher rate.

5. Capital gains tax: annual exempt amount

As announced in the Autumn Statement, the capital gains tax annual exempt amount will increase by 1 per cent in 2014-15 to £11,000 and by 1 per cent in 2015-16 to £11,100.

6. Inheritance tax: nil rate band

As announced in the Autumn Statement, the inheritance tax nil rate band will increase by 1 per cent to £329,000 in 2015-16.

7. Fuel duty

As announced in the Autumn Statement, secondary legislation will be introduced to cancel the fuel duty rate increase due to come into effect from 1 January 2013. The effect will be to maintain the duty liability on all fuels at current levels

8. Changes to the value of the tax exemption for employer supported childcare

Secondary legislation will be introduced to increase the tax exempt amount for employer supported childcare (childcare vouchers or directly contracted childcare) from £22 per week to £25 per week for additional rate taxpayers who join such a scheme on or after 6 April 2011. This will ensure the value of tax relief available for employer supported childcare continues to be aligned to the value received by basic rate taxpayers.

Separate secondary legislation will align the value of the national insurance contributions disregard for childcare vouchers with the tax treatment. These changes will take effect on 6 April 2013.

9. UK-Switzerland agreement: remittance basis

Legislation will be introduced to ensure that the policy objectives behind the original agreement are delivered in full. These provisions will mean that appropriate mechanisms are in place so that levies received by HMRC under the agreement are not treated as taxable remittances themselves where they are made by or on behalf of non-UK domiciled individuals. The changes will take effect from the date that the agreement comes into force which is expected to be 1 January 2013.

10. Information powers

Following consultation, legislation will be introduced to bring into effect the UK-US Agreement to Improve International Tax Compliance and to Implement FATCA (US provisions commonly known as the Foreign Account Tax Compliance Act) which was signed on 12 September 2012.

A response to the consultation, draft regulations and guidance were published on 18 December 2012 and can be found from the links below.

Please send any comments on the draft regulations and guidance to FATCA consultation by 28 February 2013.

Summary of responses: Implementing the UK-US FATCA Agreement

Implementing the UK-US FATCA Agreement: FAQ's about data protection (PDF 18K)

Read the draft regulations (PDF 1.5MB)

Find the draft guidance (PDF 281K)

11. Overpayment relief: limiting the effect of prevailing practice and timing of loss mistakes

Legislation will be introduced to ensure that:

  • overpayment relief claims will not be affected by prevailing practice if tax has been charged contrary to EU law; and,
  • the time limit for overpayment relief claims runs in all mistake cases from the period of the mistake.

The legislation takes effect for claims received from six months after Royal Assent to Finance Bill 2013.

12. Building society capital instruments

Secondary legislation will be introduced to ensure new Core Tier One regulatory capital instruments developed by building societies will be taxed in the same way as ordinary share capital in order to meet the requirements of the forthcoming Capital Resources Requirement Directive IV.

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Overview of Legislation in Draft (OLD)

This document contains an overview of every measure which has draft legislation for Finance Bill 2013 published today, together with the relevant Tax Information and Impact Notes (TIINs).

Individual TIINs are available from the menu below.

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Tax Information and Impact Notes

The TIINs  published today set out for each measure what the new legislation seeks to achieve, why the Government is undertaking the change and a summary of the expected impacts of the change.

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Finance Bill 2013 - draft clauses and explanatory notes

This contains draft clauses and explanatory notes to be included in Finance Bill 2013. The draft Finance Bill is due to be published after Spring Budget 2013.

Further announcement on 21 December on a new anti-avoidance measure relating to trade and property business deductions

On 21 December, the Government made a further announcement about the 2013 Finance Bill. It stated that it will introduce targeted anti-avoidance rules to the Income Tax and Corporation Tax provisions prohibiting and allowing deductions from the profits of trade and property businesses. HM Revenue & Customs (HMRC) has published the legislation in draft. HMRC has also published an explanatory note on the legislation and a Tax Information and Impact Note (TIIN).

Read the legislation (PDF 135K)
Read the explanatory note (PDF 13K)
Find the TIIN (PDF 41K)

Simpler income tax for small businesses: further legislation

The draft legislation published on 11 December 2012 has been amended to include the transitional rules for the cash basis for small businesses and for simplified expenses for small businesses.

Read the cash basis schedule (PDF 302K)
Read the simplified expenses schedule (PDF 229K)
Read the cash basis explanatory note (PDF 110K)
Read the simplified expenses explanatory note (PDF 32K)
Read the technical note (PDF 81K)

Further announcement on 17 January on Corporation Tax and Chief Police Constables

The Government will introduce an exemption from Corporation Tax for the the corporations sole of Chief Police Constables. On 17 January, HM Revenue & Customs (HMRC) published the relevant Finance Bill 2013 legislation in draft. HMRC has also published an explanatory note (EN) on the legislation and a Tax Information and Impact Note. Any comments on the draft legislation should be made by 6 February 2013 to the contact details in the EN.

Read the Chief constables etc (England and Wales): exemption from Corporation Tax (PDF 127K)
Read the Explanatory note: Chief constables and Commissioner of Police of the Metropolis - corporation tax (PDF 12K)
Read the TIIN Chief Constables: exemption from corporation tax (PDF 57K)

Further announcement on 17 January on pensions drawdown

At Autumn Statement 2012 the Government announced that it will raise the annual drawdown limit from 100 per cent to 120 per cent of the value of an equivalent annuity. On 17 January 2013 HM Revenue & Customs (HMRC) published the legislation in draft. HMRC has also published an explanatory note (EN) on the legislation and a Tax Information and Impact Note. Any comments on the draft legislation should be made by 6 February 2013 to the contact details in the EN.

Read the Announcement of draft legislation on pensions drawdown (PDF 134K)
Read the Explanatory Note drawdown pensions and Dependants drawdown pensions (PDF 13K)
Read the TIIN pensions - Capped drawdown (PDF 36K)

Further announcement on 17 January on non-domicile taxation

The Government has stated that it will remove a tax charge under the remittance basis which can arise inadvertently in certain circumstances. On 17 January 2013 HM Revenue & Customs (HMRC) published additional legislation in draft. HMRC has also published an explanatory note (EN) on the legislation. A Tax Information and Impact Note was published on 11 December 2012. Any comments on the draft legislation should be made by 6 February 2013 to the contact details in the EN.

Read the Draft legislation - inadvertent remittances (PDF 56K)
Read the Explanatory Note remittance basis: payments on account (PDF 29K)
Find the TIIN non-domicile taxation (PDF 39K)

Further announcement on 17 January on trusts with vulnerable beneficiaries

On 11 December 2012 the Government published draft legislation on the definition of trusts with vulnerable beneficiaries. On 17 January revised draft legislation was published, containing detailed provisions originally planned to be introduced by secondary legislation but which will now be introduced via Finance Bill 2013. HMRC has also published an explanatory note (EN) on the legislation. A Tax Information and Impact Note was published on 11 December 2012. Any comments on the draft legislation should be made by 6 February 2013 to the contact details in the EN.

Read the Draft legislation - vulnerable beneficiary trusts (PDF 103K)
Read the Explanatory Note vulnerable beneficiary trusts (PDF 38K)
Find the TIIN vulnerable beneficiary trusts (PDF 48K)

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Further announcement on 31 January on the Annual Residential Property Tax on certain corporate and other entities owning high-value interests in residential dwellings and also for the related reliefs from the 15 per cent rate of SDLT

On 31 January, the Government published revised and augmented draft legislation for the Annual Residential Property Tax on certain corporate and other entities owning high-value interests in residential dwellings and also for the related reliefs from the 15 per cent rate of SDLT. This Government has also published draft legislation to introduce a capital gains tax charge payable by certain non-natural persons (NNPs) when they dispose of interests in high value residential property in the UK on or after 6 April 2013. HM Revenue & Customs (HMRC) has published the legislation in draft for technical consultation until 22 February, contact details may be found in the explanatory notes. HMRC has also published explanatory notes on the legislation.

Read the Annual Residential Property Tax draft legislation (PDF 624K)
Read the Annual Residential Property Tax Explanatory Note (PDF 175K)

Read the 15 per cent SDLT draft legislation (PDF 200K)
Read the 15 per cent SDLT Explanatory Note (PDF 67K)

Read the Capital Gains Tax on non-natural persons disposing of high value property draft legislation (PDF 241K)
Read the Capital Gains Tax on non-natural persons disposing of high value property Explanatory Note (PDF 42K)

Further announcement on 31 January on the restriction of allowances for certain decommissioning expenditure in the oil and gas industry

On 31 January, the Government made a further announcement about the 2013 Finance Bill. It stated that it will legislate regarding the restriction of allowances for certain decommissioning expenditure in the oil and gas industry. HM Revenue & Customs (HMRC) has published the legislation in draft for technical consultation until 18 February contact details may be found in the explanatory notes. HMRC has also published an explanatory note on the legislation. A correction has also been made to legislation previously published on 12 December.

Read the new draft legislation : restriction on allowances of certain commissioning expenditure-site restoration (PDF 137K)
Read the new Explanatory Note : restriction on allowances of certain commissioning expenditure-site restoration (PDF 18K)

Read the corrected draft legislation : restriction on allowances of certain commissioning expenditure-plant and machinery (PDF 22K)
Read the corrected Explanatory Note : restriction on allowances of certain commissioning expenditure-plant and machinery (PDF 22K)

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Other documents - including Written Ministerial Statements, Consultation documents, Reports/Summaries of responses, Technical Notes etc

Written Ministerial Statements

Written Ministerial Statement 11 December 2012 (Opens new window)

All other documents

All other documents have been grouped together by reference to business stream rather than document type.

Personal Taxes

Business Taxes

Indirect Taxes; VAT and Excise Duties

Tax Administration and Anit Avoidance

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