Finance (No. 2) Bill 2024

Finance (No. 2) Bill 2024 (widely referred to as the Spring Finance Bill) was published on 14 March 2024. The second reading of the Bill in Parliament has been scheduled for 17 April 2024, but at the time of writing, no date had been published for the commencement of the committee stage. This article provides an overview of the key measures in the Bill, many of which were featured in the Chancellor’s recent Spring Budget. It should be noted that the National Insurance changes announced at the Spring Budget will not be legislated via the Finance Bill. They were included in the National Insurance Contributions (Reduction in Rates) (No. 2) Bill which received Royal Assent on 20 March 2024.

The Finance (No. 2) Bill was, as usual, accompanied by explanatory notes. Some of the more notable measures were covered in the last edition of Tax Matters Digest including additional support for the creative industry sectors and the abolition of the Stamp Duty Land Tax Multiple Dwellings Relief. In this edition of Tax Matters Digest, we have also published articles on Reserved Investor Funds and the changes to the Transfer of Assets Abroad provisions.

Some other measures of interest are discussed briefly below.

This measure was announced on 9 June 2023 and effectively disapplies the Energy Profits Levy (EPL) where average oil and gas prices fall below certain thresholds. The legislation published largely follows what was already communicated by the Government. The ESIM operates via reference to the average price of oil and gas over a six month period (‘reference period’). For reference periods ending with 31 March 2024, the threshold price is set at $71.30 per barrel for oil and £0.54 per therm for gas. For reference periods beginning after 31 March 2024, the threshold price is set at $74.21 per barrel for oil and £0.57 per therm for gas. These threshold prices are adjusted by reference to the Consumer Price Index each year. Where the price of oil and gas both fall below the thresholds for two successive reference periods, the ESIM will disapply the EPL. The ESIM is legislated to apply in line with the end of the EPL which is currently set to end on 31 March 2028 although the Government announced in the recent Spring Budget that this would be extended another year to 31 March 2029. 

Further to the Chancellor’s Spring Budget announcement, the higher rate of capital gains tax applied to capital gains realised from disposal of residential property will reduce from 28 percent to 24 percent. This introduces a new rate of capital gains tax and will apply to disposals made on or after 6 April 2024. It should be noted that the basic rate applied to residential property disposals will remain at 18 percent and the rate applied to private equity carried interest payments will also remain at 28 percent.

Currently, the High Income Child Benefit Charge starts applying to an individual with adjusted net income of £50,000 per year in a household in which someone is in receipt of child benefit. The clawback takes 1 percent of child benefit for every £100 of income over £50,000, until the whole amount is clawed back by the time an individual has adjusted net income of £60,000 per year. For tax years 2024-25 and beyond, these bands will change so that the clawback will commence from £60,000 and will clawback 1 percent for every £200 above this amount, until the whole amount is clawed back by the time an individual has adjusted net income of £80,000 per year. This will be a welcome change for many households, who would have opted not to claim the child benefit monies at all because they were already over the £60,000 threshold. The charge will continue to be levied based on an individual’s income, rather than household income; the Chancellor has stated that a consultation will be launched in due course to look at ways of addressing this issue to remove perceived unfairness in the current system.     

The legislation introduces a restriction to agricultural property relief and woodlands relief from inheritance tax to property located in the UK from 6 April 2024. From this date, property located in the Channel Islands, Isle of Man and the European Economic Area (EEA) will be treated in the same way as property located outside the UK and will not be eligible for the reliefs.

For further information please contact:

• Tim Sarson
• Sharon Baynham