The government's draft proposed clauses and updates for Finance Bill 2022-23 have been published. The new legislation relating to annual taxes, new proposals and the administration of the tax system include the following:
Individual income tax
- A "top-up" payment will be made to workers who contribute to a pension scheme, but who do not receive tax relief because their earnings are less than their personal allowance. The payment will equate to the relief they would have received if their income had been higher.
- If a collective money purchase pension scheme is wound up, new legislation will ensure that savers can continue receiving authorized pension payments or make a transfer to another pension scheme and receive a drawdown pension.
Corporate income tax
- A new multinational top-up tax will apply to multinational enterprise groups if a non-UK subsidiary's profits are taxed at less than 15%.
- Changes to research and development tax relief will expand qualifying expenditure to include data licences and cloud computing and the relief will be focused on UK expenditure.
- Amendments to the qualifying asset holding companies regime will allow an investment fund to be treated as meeting the diversity of ownership condition if it is closely associated with another investment fund that meets that condition. Some funds will find it easier to access the regime and the anti-fragmentation rule will be extended.
- Transfer pricing documentation rules will require the largest UK businesses to retain, and produce upon request, a master file, local file and summary audit trail.
- Double taxation relief rules will be amended to prevent relief some claims if they relate only to deemed amounts of overseas tax.
Capital gains tax
- Transfers of assets between spouses and civil partners who are separating will be treated as made on a "no gain/no loss" basis for up to 3 tax years rather than only in the current year as at present.
- Members of limited liability partnerships and Scottish partnerships will be able to claim capital gains tax relief on an exchange of interest in land or private residences held by the partnership.
The government will amend the current legislation to ensure that the assets that were transferred to the Dormant Assets Scheme Reclaim Fund and which are subsequently returned receive the correct tax treatment.
Air passenger duty
A new domestic band for air passenger duty will be introduced from April 2023 for flights within the United Kingdom and a new ultra-long-haul band will apply to destinations with capitals more than 5,500 miles from London.
Alcohol duty will be amended to establish common tax bands based on strength. Two new reliefs and a temporary easement for the wine industry are introduced.
The legislation was subject to consultation until 14 September, although comments on the alcohol duty proposals can be made until 18 November 2022.