spring finance bill

The Finance No. 2 Bill 2024 (also referred to as the Spring Finance Bill 2024) received Royal Assent on 24 May 2024, thus becoming the Finance (No.2) Act 2024. Royal Assent marks the final phase of a bill’s journey through Parliament, at which point it becomes law.

Provisions in the spring finance bill

The Spring Finance Bill encompasses several measures announced in the Spring Budget 2024. It includes:

  • Raising the thresholds for the high income child benefit charge (HICBC) for 2024/25 and subsequent tax years. The lower threshold increases from £50,000 to £60,000, and the higher threshold from £60,000 to £80,000.
  • Reducing the higher rate of capital gains tax for residential property gains from 28% to 24%, effective for disposals made on or after 6 April 2024.
  • Abolishing multiple dwellings relief for stamp duty land tax (SDLT), applicable to land transactions where the effective date is on or after 1 June 2024, with certain transitional arrangements.
  • Ensuring individuals cannot circumvent the transfer of assets abroad (ToAA) anti-avoidance rules by using a closely-held company to transfer assets offshore. This measure is discussed in more detail below.

The Institute of Chartered Accountants in England and Wales (ICAEW) has a dedicated webpage which offers further information.

ICAEW’s Perspective on the Changes to the ToAA Rules

ICAEW’s Tax Faculty (which is recognised as one of the leading authorities on taxation) briefed MPs on the amendments to the ToAA rules (ss714-751, Income Tax Act 2007). These rules are intended to prevent tax advantages when a UK resident individual transfers an asset to an overseas entity while still benefiting from the income derived from that asset. The changes specifically target the use of a close company, or a company that would be considered close if it were UK resident, to facilitate the transfer. The government insists that these changes are necessary following the Supreme Court’s decision in the case of Fisher.

ICAEW believes that the amendments to the Spring Finance Bill expand the scope of the rules and complicate their application, thereby increasing uncertainty for taxpayers and adding to HMRC’s workload. For instance, the changes apply to all income arising on or after 6 April 2024, regardless of when the transfer took place. Consequently, taxpayers will need to apply the new legislation to past transfers. Moreover, the new legislation may affect transactions between subsidiary companies, which could be burdensome given the frequency of intra-group transactions.

All information should be considered general, for specific advice on your own personal or business circumstances, please contact us directly.

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