The UK government today announced it will reintroduce its finance bill, including legislation aimed at the restricting amount of interest and other financing amounts that a company may deduct for corporation tax purposes, “as soon as possible” after summer recess, after the bill was earlier postponed because of the snap election.
The coming finance bill will include all the tax changes that were announced last March and later withdrawn, and these provisions will retain their original effective dates if applying from the start of the 2017–18 tax year or some other point before the introduction of the forthcoming finance bill, the government said. This means that the interest deduction provisions will apply from April 1.
Separately, the government released a new draft version of the interest deduction restriction legislation, which includes several amendments to the earlier provision. Revised versions of legislation were also released on loss relief, hybrid mismatches, deemed domicile for income tax and capital gains, substantial shareholding exemption for institutional investors, inheritance tax on overseas property representing UK residential property,and employment income provided through third parties.
The revisions are designed to make the legislation work as intended, the government said.
The finance bill will also include legislation for the Making Tax Digital (MTD) program, the UK government announced.
“Having listened carefully to the concerns raised by the Treasury Select Committee, parliamentarians and stakeholders, the government is announcing policy changes that will be reflected in the legislation to be introduced. Businesses will not be mandated to use the MTD system until April 2019 and then only to meet VAT obligations. This will apply to businesses with turnover above the VAT threshold. Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able opt in for other taxes, benefiting from a streamlined, digital experience,” the government said.
The government also said it would not widen scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest.