FINANCE BILL EXPLANATORY NOTES FINANCE BILL Table of Contents Introduction ........................................................ 13 Part 1: Income Tax, Corporation Tax and Capital Gains Tax ............................................... 15 Clause 1: Income tax charge for tax year 2021- 22 .......................................................................... 16 Clause 2: Main rates of income tax for tax year 2021- 22 ................................................................ 17 Clause 3: Default and savings rates of income tax for tax year 2021-22 ..................................... 19 Clause 4: Starting rate limit for savings for the tax year 2021-22 .................................................. 21 Clause 5: Basic rate limit and personal allowance for future tax years .......................... 24 Clause 6: Charge and main rate for financial years 2022 and 2023 ........................................... 27 Clause 7 and Schedule 1: Small profits rate chargeable on companies from 1 April 2023 . 29 Clause 8: Increase in the rate of diverted profits tax ............................................................ 46 Clause 9: Super-deductions and other temporary first-year allowances ...................... 48 1 FINANCE BILL Clause 10: Further provision about super- deductions etc ..................................................... 57 Clause 11: Reduced super-deduction ............. 61 Clause 12: Disposal of assets where super- deduction made ................................................. 65 Clause 13: Disposal of assets where SR allowance made .................................................. 72 Clause 14: Counteraction where arrangements are contrived etc ................................................. 77 Clause 15: Extension of temporary increase in annual investment allowance .......................... 81 Clause 16: Meaning of “general decommissioning expenditure” ...................... 86 Clause 17: Extensions of plant or machinery leases for reasons related to coronavirus ....... 91 Clause 18 and Schedule 2: Temporary extension of periods to which trade losses may be carried back .................................................... 95 Clause 19 and Schedules 3 and 4: R&D tax credits for SMEs ............................................... 111 Clause 20: Extension of social investment tax relief for further two years ............................. 119 2 FINANCE BILL Clause 21: Workers’ services provided through intermediaries ................................... 121 Clause 22: Payments on termination of employment ...................................................... 131 Clause 23: Cash equivalent benefit of a zero emissions van ................................................... 137 Clause 24: Enterprise management incentives ............................................................................ 140 Clause 25: Cycles and cyclist’s safety equipment ......................................................... 144 Clause 26: Exemption for coronavirus tests . 148 Clause 27: Optional remuneration arrangements: statutory parental bereavement pay ...................................................................... 152 Clause 28: Freezing the standard lifetime allowance .......................................................... 156 Clause 29 and Schedule 5: Pension schemes: collective money purchase benefits .............. 158 Clause 30 and Schedule 6: Construction industry scheme ............................................... 186 Clause 31: Covid-19 support scheme: working households receiving tax credits ................... 198 3 FINANCE BILL Clause 32: Self-employment income support scheme ............................................................... 201 Clause 33: Deduction where business rates etc repaid ................................................................. 205 Clause 34: Repeal of provisions relating to the Interest and Royalties Directive ..................... 209 Clause 35: Payments made to victims of modern slavery etc .......................................... 212 Clause 36 and Schedule 7: Hybrid and other Mismatches ....................................................... 214 Clause 37 and Schedule 8: Relief from corporation tax for losses etc .......................... 286 Clause 38: Corporate interest restriction: minor amendments ..................................................... 301 Clause 39: Northern Ireland Housing Executive ........................................................... 305 Clause 40: Annual exempt amount ............... 307 Clause 41: Hold-over relief for foreign- controlled companies ...................................... 309 Part 2: Plastic Packaging Tax .......................... 311 Clause 42: Plastic packaging tax .................... 312 4 FINANCE BILL Clause 43: Charge to plastic packaging tax .. 315 Clause 44: Liability to pay plastic packaging tax ....................................................................... 317 Clause 45: Rate ................................................. 319 Clause 46: Payment .......................................... 321 Clause 47: Chargeable plastic packaging components ....................................................... 323 Clause 48: Meaning of “plastic packaging component” ...................................................... 326 Clause 49: Meaning of “plastic” and “recycled plastic” ............................................................... 330 Clause 50: Time of importation ..................... 334 Clause 51: Plastic packaging components intended for export .......................................... 336 Clause 52: Exempt plastic packaging components ....................................................... 340 Clause 53: Tax credits ...................................... 343 Clause 54: The register .................................... 347 Clause 55: Liability to register: producers and importers ........................................................... 349 5 FINANCE BILL Clause 56: Notification of liability and registration ........................................................ 353 Clause 57: Cancellation of registration ......... 356 Clause 58: Correction of the register ............. 360 Clause 59 and Schedule 9: Notices imposing secondary or joint and several liability ........ 362 Clause 60: Measurement of weight etc ......... 389 Clause 61 and Schedule 10: Payment, collection, recovery .......................................... 392 Clause 62 and Schedule 11: Reviews and appeals ............................................................... 408 Clause 63: Records ........................................... 423 Clause 64 and Schedule 12: Information and evidence ............................................................. 426 Clause 65: Security for tax .............................. 432 Clause 66: Unincorporated bodies ................ 434 Clause 67: Service ............................................. 436 Clause 68: Statements for business customers ............................................................................ 439 Clause 69: Tax representatives of non-resident taxpayers ........................................................... 442 6 FINANCE BILL Clause 70: Adjustment of contracts ............... 447 Clause 71 and Schedule 13: Groups of companies ......................................................... 450 Clause 72: Prevention of artificial separation of business activities: directions .................... 460 Clause 73: Prevention of artificial separation of business activities: effect of directions ..... 464 Clause 74: Death, incapacity or insolvency of person carrying on a business: regulations .. 468 Clause 75: Transfer of business as a going concern: regulations ........................................ 471 Clause 76: Isle of Man: import and export of chargeable plastic packaging components ... 474 Clause 77: Fraudulent evasion ....................... 477 Clause 78: Misstatements ................................ 480 Clause 79: Conduct involving evasions or misstatements ................................................... 483 Clause 80 and Schedule 14: Penalty for contravening relevant requirements ............. 486 Clause 81: Criminal proceedings ................... 495 7 FINANCE BILL Clause 82 and Schedule 15: Minor and consequential amendments ............................ 497 Clause 83: Interpretation ................................. 503 Clause 84: Regulations .................................... 505 Clause 85: Commencement etc ...................... 510 Part 3: Other Taxes ........................................... 512 Clause 86: Rate bands etc for tax years 2021-22 to 2025-26 ........................................................... 513 Clause 87: Temporary period for reduced SDLT rates on residential property ............... 516 Clause 88 and Schedule 16: Increased rates for non-resident transactions ............................... 523 Clause 89 and Schedule 17: Relief from higher rate charge for certain housing co-operatives etc ....................................................................... 550 Clause 90: Relief for certain housing co- operatives .......................................................... 562 Clause 91: Repayment to certain housing co- operatives: 2020-21 chargeable period .......... 569 Clause 92: Extension of temporary 5% reduced rate for hospitality and tourism sectors ........ 573 8 FINANCE BILL Clause 93: Temporary 12.5% reduced rate for hospitality and tourism sectors ..................... 575 Clause 94: Extending