Key Facts

• The rate of relief for businesses investing in R&D will increase from 12% to 13%.
• Clause 27 provides an additional £1 billion of support over five years.
• In 2016-17, the Government provided over £2.2 billion to businesses through RDEC, supporting almost £25 billion-worth of R&D activity.
• The SME scheme offers a 230% corporation tax deduction on R&D spend and a 14.5% payable credit for losses.
• £2.2 billion was claimed through the SME scheme in 2016-17.
• In 2016-17, just under 3,500 SMEs claimed over £200 million through RDEC.
• The rate of SBA will increase from 2% to 3% per annum starting on 1 April 2021 for businesses chargeable to income tax and corporation tax respectively.
• The amendments prevent double relief, clarify rules for allowances on contributions to public bodies, ensure relief is available from the first day a structure or building comes into use, simplify compliance for taxpayers, and ease administrative requirements.
• New clause 10 would require the Chancellor of the Exchequer to review the impacts of the amendments within six months.
• The Chartered Institute of Taxation has noted that regular changes to rules bring additional complexity and uncertainty.
• The SBA was introduced in October 2018.
• Clause 29 and schedule 4 aim to make the SBA work as intended, correcting initial issues without prior consultation.
• The speaker wrote to the Government about VAT on building repairs but is unsure if a response was received.
• In Scotland, over £1 billion has been allocated since 2009 to tackle fuel poverty and improve energy efficiency in homes.
• Legally binding standards for home energy efficiency will be implemented in Scotland from 2024 onwards.
• Governments face risks associated with 'tinkering' with tax legislation.
• A business investing in a £10 million building will be able to deduct an extra £100,000 annually under the SBA amendments.
• The National Farmers Union supports the increase in SBA as it aids modern infrastructure investment and net zero ambition.
• Amendments to clause 28 are minor but necessary technical changes.
• Clause 30 amends the commencement rules in part 8 of the Corporation Tax Act 2009.
• It brings all intangible assets into a single tax regime acquired after July 1, 2020.
• An estimated 1,000 companies acquire pre-Finance Act 2002 assets annually.
• The surcharge applies to corporation tax profits of banking companies within a banking group.
• Capital losses transferred from a non-banking company to a banking company and set against the capital gains should be disregarded when calculating the surcharge profit.
• Clause 32 will ensure that banks cannot use losses from non-banking companies in their groups to reduce surcharge profits.
• The UK has a global financial sector with centres in London, Birmingham, Leeds, and Edinburgh.
• Between 2000 and 2007, aggregate bank leverage increased from 20 times capital to 50 times capital.
• The Vickers report found that the level of aggregate bank leverage remained steady at 20 times capital for 40 years between 1960 and 2000.
• Clause 33 and schedule 6 address a tax tribunal decision that could affect the UK's right to tax profits on asset transfers to EU companies.
• Transfers of assets from a UK company to an EEA company within the same group can be paid in instalments over five years with interest at the usual rate for late-paid tax.
• The facility will be repealed by regulation once certainty is achieved through successful litigation or when EU treaty freedom of establishment rules no longer apply.
• The Government aims to maintain public consent for the fairness of the tax system.
• There have been consultations on schemes like the loan charge and IR35 aimed at ensuring fairness.
• A consultation is announced on a strategy to tackle promoters and enablers of tax avoidance more vigorously.
• The amendment requires a report from the Chancellor of the Exchequer by 5 April 2021.
• The Enterprise Investment Scheme (EIS) offers tax relief to individual investors up to £5 million per year and £12 million over a company’s lifetime.
• Scotland attracts more foreign direct investment than any part of the UK outside London, with Aberdeen leading in securing investment.
• Venture capital is highly concentrated in the golden triangle (London, south-east England, east England) receiving 73% of all venture capital from 2016 to 2018 according to the British Venture Capital Association.
• Between 2015 and 2018, only 210 Welsh firms benefited from EIS, receiving 1.3% of total investment while the golden triangle received 67% of all investment.
• The Government are providing additional flexibility for fund managers but not further tax relief.
• Ipsos MORI research from 2016 shows that income tax relief was very important to eight in ten investors using the EIS.
• London and the south-east received 65% of all EIS investment in 2018-19.
• Clause 35 amends the approved enterprise investment scheme fund rules.
• The changes aim to focus investments on knowledge-intensive companies investing at least 80% of capital raised into such companies within two years.
• A full review of EIS will be conducted before its renewal decision in 2024.
• Top-slicing relief (TSR) was introduced in 1968 to mitigate higher tax charges on life insurance gains taxed in one year.
• The clause will cost the Exchequer £15 million per annum.
• Around 2,000 of the 45,000 taxpayers entitled to top-slicing relief every year are estimated to be affected by this change.
• Top-slicing relief has been around for a long time and requires legislative clarity.
• The clause aims to reinstate the personal allowance for top-slicing relief calculation purposes.
• HMRC will manually calculate the relief for self-assessment returns submitted for the 2019-20 tax year and automatically in subsequent years.
• Share loss relief applies where an investor makes a qualifying share investment that results in a loss.
• Qualifying shares are those attributed to EIS or SEIS schemes or issued by a UK-based small or medium unlisted trading company.
• The measure will apply to investments made after January 21, 2019.
• HMRC will need information on the tax residency of companies issuing shares for reporting purposes.
• Compliance with EU rules on free movement of capital is mandated by this change.