Finance Bill 2019-20 – proposed tax changes
Aug 07, 2019
Budget & Autumn Statement
The government has published its draft legislation for the Finance Bill 2019-20, which will then become the Finance Act 2020 assuming it is passed in March 2020. Most of the new tax laws are due to come into effect from April 2020, but as the current consultation period doesn’t close until 5 September 2019 the individual details and start dates could well change. And if there is an emergency Brexit Budget before 31 October, or even a general election before Spring 2020, the content and timing of the Finance Bill could alter significantly.
Here is a brief summary of a few of the more important proposals.
This is the reform of the IR35 rules for the private sector, which we examined in our article in March 2019. The consultation ran until May 2019, and the current draft Finance Bill confirms that the proposals will definitely take effect, and that the IR35 rules will be extended to the private sector from next April.
The private sectors rules will not apply where the end client is a small organisation, (as defined in the Companies Act 2006), where two of the following three criteria are met:
- annual turnover – not more than £10.2m
- balance sheet total – not more than £5.1m
- number of employees – not more than 50
If the end client business does not meet the small companies definition it will be classed as a medium or large organisation, and from 6 April 2020 the business will have to consider if the new off-payroll rules will apply whenever it uses contract labour. This means reviewing all work contracts and making a ‘status determination’ for each. It’s worth noting that HMRC has also included provisions for anti-avoidance, by ensuring that subsidiaries cannot qualify as small company if they’re part of a group.
Various new tax rules have been proposed, which will affect private residence relief on rental property from 6 April 2020. We outlined the detail of these new proposals in our article back in May 2019, and the current draft legislation confirms that these will be going ahead as planned.
Tax abuse and corporate insolvency
The aim of these new rules is to tackle taxpayers who misuse company insolvencies in order to avoid paying tax. The proposals are for directors and other company stakeholders to be made jointly and severally liable for any tax debts owed by the company when it is subject to an insolvency procedure. The draft legislation sets out five conditions that must be met, including provisions to discourage the phoenixism of companies to avoid tax debts.
If you have any questions about these upcoming tax changes, please get in touch with one of the PT team.