Finance Bill 2024-25
The Finance Bill, containing draft legislation for many of the measures announced at the Autumn Budget, was published on 7 November
Following the Autumn Budget, the Finance Bill was published on 7 November
Finance Bill 2024-25 (sometimes referred to as the Autumn Finance Bill) was introduced to the House of Commons and given its first reading on 6 November 2024, following the agreement of the Budget Resolutions. It was then published on the parliament website on 7 November alongside explanatory notes. The Bill’s second reading is scheduled for 27 November. At the time of writing details of the subsequent committee stage had not been confirmed.
The Bill contains draft legislation for many of the measures announced at the Autumn Budget but not the significant changes to employer’s National Insurance Contributions which are included in the separate National Insurance Contributions (Secondary Class 1 Contributions) Bill which was published on 13 November. It also doesn’t include legislation on the proposed changes to Inheritance Tax (IHT) Agricultural Property Relief and Business Property Relief which are coming in from April 2026 and will be in a future Bill, although anti-forestalling measures are expected from 30 October 2024 and we are expecting a technical consultation in early 2025 on the detailed application of the changes to transfers into trusts and to trust property. We saw the draft legislation on the fundamental change in scope of IHT to a residence based IHT system, the Non-Dom reforms and changes to capital gains tax (rates, Business Asset Disposal Relief, Investors’ Relief and Employee Ownership Trusts) on Budget day and this is now included in the Finance Bill as expected.
The measures impacting businesses are less headline-grabbing, but multinationals will be interested in our separate article on various amendments to the UK’s existing Pillar Two rules and businesses operating in the creative sectors will be interested in our article discussing further relief and other changes for creative industries. Some other measures of interest are discussed briefly below.
The OECD Crypto-Assets Reporting Framework (CARF)
The Bill includes legislation providing the Treasury with powers to make regulations to implement the CARF in the UK. This follows the Government’s reiteration of the UK’s commitment to adopt the framework at the Autumn Budget, when it also took the further step of applying it to UK resident taxpayers which means that all UK investors into cryptocurrency should be reported to HMRC either by UK institutions or overseas institutions. Both requirements will come into force from 1 January 2026, with first reporting by 31 May 2027.
The proposed regulations, a draft of which are currently open for consultation, confirm that HMRC will apply a per account penalty for failures to comply, rather than the flat penalty applied today for the Common Reporting Standard (CRS).The penalties under CRS will also be changed to a per account penalty. The proposed regulations also include provisions allowing HMRC to fine UK crypto users who fail to provide a self-certification when requested. Although this provision is intended to make it easier for in-scope organisations to collect documentation, there may be concerns about the impact on customer relationships where fines are levied.
Research and development (R&D) tax reliefs
The Bill introduced two new changes to the R&D incentives regime, and both impact the loss-making R&D intensive small and medium-sized enterprises (SME) regime only. No changes have been made to the new merged R&D Expenditure Credit (RDEC) scheme introduced with effect for accounting periods beginning on or after 1 April 2024.
The first change impacts loss making R&D intensive SMEs with a registered office in Northern Ireland. The changes provide a bespoke version of the intensive SME scheme to Northern Ireland registered companies. They may benefit from the enhanced relief in excess of the benefit they would obtain under a RDEC claim up to a rolling cap of €300,000 and are not subject to the overseas restriction applying to expenditure incurred on subcontracted R&D or Externally Provided Workers. Companies that have no element of trading in goods and no relevant activities in relation to the electricity market may opt out of the Northern Ireland version and this will mean that the above overseas restriction does apply but there will be no cap on the amount of benefits. The new rules will apply to claims made on or after 30 October 2024. Companies claiming enhanced SME relief and registered in Northern Ireland should seek advice on how these changes may impact future claims.
The second change is intended to correct a previous error. Companies seeking to make a loss-making R&D intensive SME claim for the period between 1 April 2023 to 31 March 2024 may, when looking at the R&D intensive requirement, include expenditure eligible for both the SME scheme and RDEC scheme in determining if the R&D expenditure is at least 40 percent of relevant total expenditure. This was always the intention, but the legislation omitted the inclusion of RDEC expenditure meaning some companies who should have benefitted may have failed to meet the intensive threshold. SMEs that have claimed RDEC expenditure in the period between 1 April 2023 to 31 March 2024 and meet the other requirements should revisit whether they would be eligible for a claim under the more generous intensive SME regime.
Stamp Duty Land Tax (SDLT)
The key SDLT changes in the Finance Bill concern the rates applicable to residential property. With effect from 31 October 2024 (subject to transactional provisions where, broadly, exchange was earlier) the 3 percent 'second homes' surcharge is increased to 5 percent and the 15 percent flat rate for dwellings acquired by companies with no qualifying business is increased to 17 percent. Although not a provision in the Finance Bill, it is also worth noting that the current Government has not extended the 1 April 2025 sunset date for the temporary wider nil band of SDLT for residential property introduced by the last Government: so from 1 April 2025 the nil band will revert from the first £250,000 of chargeable consideration, to the first £125,000. Similarly, the extended wider banding for first time buyers’ relief has not been extended either. The surcharge payable by SDLT non-residents also remains the same at 2 percent.
