UK Legislates For 2016 Budget Tax Changes
The UK Government has introduced legislation to implement a range of tax measures announced in the Budget, including changes to income tax thresholds and a corporation tax cut.
Finance Bill 2016 was introduced in Parliament on March 24. It provides for a rise in the tax-free personal allowance to GBP11,500 (USD16,300) from April 2017. The allowance is already set to rise to GBP11,000 from April 2016. In addition, the legislation increases the threshold for the “higher” (40 percent) tax rate from GBP42,385 to GBP45,000 from April 2016. Taken together, the Government expects these reforms to reduce tax for more than 31m people. A tax-free Personal Savings Allowance of GBP1,000 (or GBP500 for higher rate taxpayers) for savings income or interest will enter into force from April 2016.
The Finance Bill reduces the corporation tax rate to 17 percent from 2020. It had previously been scheduled to fall to 18 percent that year. The rate is currently 20 percent.
Also on the business tax front, the legislation overhauls the oil and gas tax regime. It halves the Supplementary Charge, payable in respect of adjusted ring-fenced profits, from 20 percent to 10 percent, and reduces the Petroleum Revenue Tax from 35 percent to a zero rate.
In addition, the Bill contains a number of anti-avoidance measures. It introduces new rules to address hybrid mismatch arrangements and ensure that payments for the use of intellectual property based overseas are subject to tax. It proposes that profits from the development of UK property are always subject to UK tax, and targets value-added tax evasion by overseas sellers and online marketplaces.
Finally, the Finance Bill establishes the Office of Tax Simplification on a statutory basis.
Financial Secretary to the Treasury David Gauke commented: “This Finance Bill takes bold steps to deliver long-term solutions to long-term problems. This legislation will see workers keep more of their pay packet, savers rewarded, and reduce the burden on businesses so they can invest and create jobs. The UK is forecasted to grow faster than any other country in the G7 – this legislation delivers the reforms needed to ensure the UK remains fit for the future.”
Source: Tax News
