Finance Bill 2016 legislates new tax changes

Following last week’s Budget, the government has published Finance Bill 2016. The bill implements tax changes announced at Budget 2016, Autumn Statement 2015 and Summer Budget 2015.

The government is determined to provide opportunity for families who work hard and save, so this Finance Bill:

  • reduces tax for over 31 million individuals by increasing the personal allowance to £11,500 and the higher rate threshold to £45,000
  • introduces a new personal savings allowance so that 95% of taxpayers will pay no tax on the first £1,000 of savings income if they are a basic rate taxpayer

It also puts in place fundamental measures to back British businesses, such as:

  • cutting corporation tax to 17% in 2020 to help over a million companies
  • taking radical action on the oil and gas tax regime to safeguard jobs and encourage investment
  • supporting our vital creative sector with the introduction of a new tax relief for orchestras at a rate of 25% on qualifying expenditure

Whilst this government is committed to supporting businesses through low taxes, these taxes must be paid, so this Finance Bill:

  • counters avoidance by multinational enterprises by introducing new rules to address hybrid mismatch arrangements and ensure payments for the use of intellectual property based overseas are subject to tax
  • ensure that profits from the development of UK property are always subject to UK tax
  • targets key areas of rapidly growing online VAT evasion by overseas sellers and online marketplaces

Finally, the Finance Bill will build on the excellent progress made under the previous Parliament by establishing the Office of Tax Simplification on a statutory basis.

David Gauke, Financial Secretary to the Treasury, said:

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.

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