Finance Bill 2022: Draft clauses

: Last Updated: 05 August 2021

A set of draft legislation, together with policy papers and consultations were published on 20 July 2021, for inclusion in Finance Bill 2021-22. These are our edited highlights of the proposed new legislation.

Further details of other ongoing consultations and proposals see our 2021 Tax Planner and Rolling Update 2021-22.

Income Tax

HMRC have published a consultation ‘Basis period reform’, policy paper and Finance Bill 2022 draft legislation which proposes a simplification of the Income Tax rules for the self-employed by allocating trading profit to tax years regardless of the business’ accounting period end date.
This would take effect from 2023-24 with a transitional period in 2022-23. It is a measure to assist in reporting under Making Tax Digital for Income Tax.
Policy paper and draft legislation: Income Tax: basis period reform
Consultation: Basis period reform

See Consultation: Income Tax Basis Period reform

Pensions

Increasing the normal minimum pension age

It is proposed that Finance Bill 2022 will include a measure to increase the Normal Minimum Pension Age (NMPA) from 55 to 57, from 6 April 2028.
The NMPA is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payment tax charge unless they are retiring due to ill-health
Policy paper and draft legislation: Increasing the normal minimum pension age for Pensions Tax

See Pensions: Unauthorised payment charges

Pension Scheme Pays reporting: information and notice deadlines

It is proposed that Finance Bill 2022 will include a measure to require pension scheme administrators to pay when requested by a scheme member within an extended deadline, annual allowance charges exceeding £2,000 which arise due to a retrospective change of facts.
Scheme administrators will be required to provide a new or revised pension saving statement and the deadline for the administrator to report and pay the charge will also be extended.
Policy paper and draft legislation: Pension Scheme Pays reporting: information and notice deadlines

See Pensions: tax charge for excess contributions

Capital allowances

Amendment to allowance statement for structures and buildings allowance

Proposed changes will require Companies claiming Structures & Buildings Allowance (SBA) to include further information on an allowance statement including dates the asset was first used or/and dates of further expenditure qualifying for SBA.
See: Capital allowances: amendment to allowance statement for structures and buildings allowance

Corporation Tax

These initial proposals are unlikely to affect most Small to Medium-sized Enterprises (SMEs) and OMBs. They include:

Changes to the definition of asset holding companies in alternative fund structures

A qualifying asset holding company must:
- Be at least 70% owned by diversely owned funds, these must be managed by regulated managers or certain institutional investors
- Exist to help move capital, income and gains between investors and underlying investments

See Policy paper, Taxation of asset holding companies in alternative fund structures Policy paper

Amendments to REITS

The measure amends the tax rules that apply to Real Estate Investment Trusts (REITs). It also makes changes to conditions that a company must meet to be a UK Real Estate Investment Trust.

See Policy paper, Real Estate Investment Trusts: amendments

Amendments to hybrid and other mismatches rules

Proposed changes to legislation look at how to counter mismatches for payments to hybrid entities. These changes make sure the outcome is proportionate when relevant entities are seen as transparent in their home jurisdiction.
See Policy paper, Corporation Tax: amendments to the hybrid and other mismatches rules Policy paper

Large business: notification of uncertain tax treatment

Large businesses are those with a:
- Turnover of more than £200 million per annum.
- Balance sheet total over £2 billion.
Will be required to notify HMRC where they have adopted an uncertain tax treatment, as defined by notification criteria set out in legislation.
Large businesses: notification of uncertain tax treatment Policy paper

Anti-avoidance

New proposals to clamp down on promoters of tax avoidance

Following an April 2021 consultation, proposed legislation for Finance Bill 2022 will give HMRC new powers to:

Prevent promoters of tax avoidance schemes from dissipating or hiding assets before paying penalties charged.
Levy penalties against UK entities that facilitate the promotion of tax avoidance by offshore promoters.
Present winding-up petitions for companies operating against the public interest.
Publish details of promoters and their schemes to raise awareness and give those already involved to exit the arrangements.
Policy paper, New proposals designed to clamp down on promoters of tax avoidance arrangements
See Rolling Planner 2021-22 for details of consultations and responses.

Powers to tackle Electronic Sales Suppression (ESS)

It is proposed that Finance Bill 2022 will include a measure to make offences of the possession, making, supplying and promotion of ESS software or hardware.
ESS-specific information powers will also be introduced to allow HMRC to identify developers and suppliers in the ESS supply chain and access software developers’ source code.
Policy paper and draft legislation: Powers to tackle electronic sales suppression

Other

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