The Finance Bill 2020 is due to start its report stage and third reading in the House of Commons on Wed 1 July. A number of amendments to the Finance Bill have been submitted. They include taxation of coronavirus grant payments as taxable income; making sure those who have come out of retirement or usually work outside the UK are not disadvantaged as a result of providing help and support during the pandemic; not disadvantaging those who have been unable to sell their previous main residence due to coronavirus; not charging interest or penalties on deferred tax liabilities; encouraging would be investors and relieving some of the financial pressures on haulage companies to encourage economic recovery.
An outline of each amendment follows:
All coronavirus grants are taxable income and will be included as revenue for income tax and corporation tax purposes – although whether any tax is paid will depend on the overall tax position in each case. This includes payments made under the Coronavirus Job Retention Scheme (CJRS), Self Employment Income Support Scheme (SEISS), the Coronavirus Statutory Sick Pay Rebate Scheme and other business supporting grant schemes such as the Small Business Grant Fund, the Retail, Hospitality and Leisure Grant Fund, the Discretionary Grant Fund.
As well as ensuring that grants are taxed as income, the legislation will also give HMRC a method of recovering payments to which the recipient was not entitled, or where a CJRS payment has not been used to pay a furloughed employee. They will also be able to charge penalties for deliberate non-compliance.
This clause ensures that those who had retired, but returned to employment to support the coronavirus response do not suffer adverse tax impacts by losing their ability to receive pension benefits at an age below the current normal minimum pension age of 55.
Where the UK needs skills and expertise from people normally based outside the UK, the days an individual is required to work in the UK specifically related to coronavirus will be disregarded when determining whether they are tax resident in the UK in either tax year 2019-20 or 20-21.
This measure modifies the current SEIS and EIS rules so that existing individual shareholders who invest in the same company through a Future Fund convertible loan note, will not lose relief on any SEIS or EIS investments made prior to Future Fund investment, when that convertible loan note is redeemed, repaid or converted. The government is keen not to discourage investments in new, innovative companies by protecting reliefs on pre-existing SEIS or EIS investments.
The government is able to specify that deferred VAT and Self-Assessment payment tax liabilities will not carry interest or penalties.
Taxpayers who have paid the higher rate of Stamp Duty Land Tax for an additional dwelling and have been prevented from selling their previous main residence within the 3-year time period because of exceptional circumstances, which now include Covid-19, will be able to apply for a repayment.
Collection of the levy charged on UK and foreign hauliers to access and use the UK road network will be suspended for 12 months from 1 August 2020, helping to reduce their financial liabilities and promote economic recovery.
This measure will ensure that individuals who are furloughed or have their working hours reduced below the statutory working time requirement for EMI as a result of Covid-19 will retain the tax advantages of the scheme.
Craig Simpson, tax partner at Bates Weston comments:
“There are a number of legislative changes to the Finance Bill to enact previous statements by HMRC. It would seem fair that grants are treated as taxable income since their purpose was to replace income or revenues for affected individuals and companies. It is fair too, that those who have tried to help the UK through the pandemic are not penalised for doing so. Introducing penalties to counteract abuse of the system is also welcome.”
Useful links: Finance Bill Report Stage