The Finance (No. 2) Bill, also known as the Spring Finance Bill of 2024, was formally released on 14th March 2024. Following this, the Bill is scheduled for its second reading in Parliament on 17th April 2024, with the commencement date for the committee stage yet to be announced. It is important to note that the National Insurance changes highlighted during the Spring Budget will not be incorporated into the Finance Bill legislation, as they were included in the National Insurance Contributions (Reduction in Rates) (No. 2) Bill, which received Royal Assent on 20th March 2024.
The Finance (No. 2) Bill is accompanied by explanatory notes outlining its principal measures, including additional support for the creative industry sectors and the abolition of the Stamp Duty Land Tax Multiple Dwellings Relief, among others. Moreover, the latest edition of Tax Matters Digest contains articles on Reserved Investor Funds and the changes to the Transfer of Assets Abroad provisions.
One notable measure in the Bill is the Energy Security Investment Mechanism (ESIM), announced on 9th June 2023. The ESIM functions to disapply the Energy Profits Levy (EPL) when average oil and gas prices fall below specific thresholds. It operates based on the average price of oil and gas over a six-month period and is legislated to apply until 31st March 2028, with a potential extension to 31st March 2029 as announced in the recent Spring Budget.
Another significant change introduced in the Bill is the reduction of the higher rate of capital gains tax on gains from the disposal of residential properties from 28 percent to 24 percent, effective for disposals made on or after 6th April 2024. The basic rate for residential property disposals will remain at 18 percent, while the rate for private equity carried interest payments will also continue to stand at 28 percent.
The High Income Child Benefit Charge threshold will also see adjustments for the tax years 2024-25 and beyond. The clawback will now begin from £60,000, with a 1 percent clawback for every £200 above this amount, until the entire amount is clawed back by the time an individual’s adjusted net income reaches £80,000 per year. This change aims to make the child benefit more accessible to a broader range of households.
Furthermore, the Finance (No. 2) Bill introduces a restriction to agricultural property relief and woodlands relief from inheritance tax for properties located in the UK from 6th April 2024. This means that properties in the Channel Islands, Isle of Man, and the European Economic Area (EEA) will be treated similarly to properties located outside the UK and will not be eligible for these reliefs.
The Bill brings about various changes that will have an impact on individuals, households, and businesses across the UK. It is essential for stakeholders to keep themselves informed about the developments in the Finance (No. 2) Bill, as they will influence tax planning and financial decision-making in the coming years.