Finance Bill 2024-25

What’s in the Bill?

(with links to CIOT briefings produced for MPs where these are available)

The Bill follows autumn Budget 2024 and is the new Labour government’s first Finance Bill.

The most significant – and at 110 pages the lengthiest – measure in the Bill is abolition of the remittance basis of taxation for non-UK domiciled individuals, replacing it with a residence-based regime with effect from 6 April 2025. Individuals who opt into the regime will not pay UK tax on foreign income and gains (FIG) for their first four years of tax residence. From 6 April 2025, the government will introduce a new residence-based system for Inheritance Tax. The government is extending the Temporary Repatriation Facility to three years, expanding the scope to offshore structures, and simplifying the mixed fund rules to encourage individuals to spend and invest their FIG in the UK. 

A CIOT briefing is available on this measure. A further briefing was produced on the report stage amendments.

Other measures in the Bill include:

• VAT on school fees (CIOT briefing available)
• CGT rate increase and Investors’ Relief reduction in lifetime limit (CIOT briefing available)
• Changes to Energy Profits Levy (CIOT briefing available)
• IHT band freeze (CIOT briefing available)
• SDLT increase for additional dwellings and companies (CIOT briefing available)
• Abolition of Furnished Holiday Lets regime (CIOT briefing available)
• Alternative Finance rules changes (CIOT briefing available)
• Changes to employee-ownership trusts (CIOT briefing available)
• Changes to employee benefit trusts inheritance tax rules (CIOT briefing available)
• Changes to tax rules on liquidation of LLPs
• Extending scope of IHT agricultural property relief to land managed under environmental agreement (CIOT briefing available)
• Pillar 2 – undertaxed profits rule and other changes (CIOT briefing available)
• New visual effects tax relief
• Enabling legislation on cryptoasset reporting and a UK carbon border adjustment mechanism

 The following Budget measures are not in the Bill:

• Changes to agricultural and business property reliefs and IHT on pension pots (will be in a future Finance Bill)
• Increases to employer national insurance (in a separate bill)
• Reforms to business rates (in another separate bill)

Progress of the Bill

(with links to CIOT website reports)

27 November 2024

Finance Bill Second Reading: MPs back changes to energy levy, school fees and non-doms

Finance Bill 2024-25 cleared its first hurdle, being granted a second reading by 332 votes to 176. Liberal Democrats, SNP and Reform UK MPs joined Conservatives in voting against the Bill. Green MPs joined Labour in voting for it.

10-11 December 2024

Finance Bill 2024-25 Committee of Whole House – MPs vote to put VAT on school fees

MPs debated increases to capital gains tax and energy profits levy rates, to rates of SDLT for purchases of additional dwellings and purchases by companies, and placing VAT on private school fees, during Committee of whole House debate. The government’s clauses on these parts of the Bill passed without amendment. Opposition new clauses were either not moved or defeated in votes.

Issues raised by CIOT in briefings for MPs were cited during discussion on CGT, SDLT and VAT on school fees.

24 January 2025

Finance Bill 2024-25 Public Bill Committee Preview

A preview of public bill committee, including the government’s amendments to their proposals relating to OECD/G20 Pillar 2, tax treatment of non-doms and employee ownership trusts.

28 January 2025

Finance Bill 2024-25 Committee: MPs agree to abolish special regimes for non-doms and holiday lets

The first two sittings of the Finance Bill 2024-25 Public Bill Committee took place on the morning and afternoon of Tuesday 28 January. During these sessions, the committee considered and passed all clauses up to clause 56, as well as 64 government amendments.

Shadow ministers raised CIOT concerns on a number of the measures in these clauses, including the transitional safe-harbour anti-arbitrage rule (part of the OECD/G20 Pillar 2 legislation) and the non-dom changes. Government amendments included an expansion of the scope of acquisition costs in relation to employee-ownership trusts that can benefit from CGT relief, which the minister told the committee had been done in response to CIOT concerns (albeit the Institute would have liked to see the scope expanded still further).

30 January 2025

Finance Bill 2024-25 Committee: Government resist calls for further assessments of Bill’s impact

The third and fourth sittings of the Finance Bill Public Bill Committee took place on the morning and afternoon of Thursday 30 January. During these sessions, the committee reviewed and passed clauses 58-86 relating to areas including Inheritance tax, excise duties and environmental levies. A number of new clauses which were tabled by the opposition were rejected.

Shadow ministers raised points from CIOT briefings on issues including inheritance tax and the carbon border adjustment mechanism. In their closing remarks shadow ministers thanked CIOT for supporting them with briefing material.

3 March 2025

Finance Bill 2024-25 Report Stage and Third Reading: Bill completes Commons passage following non-dom changes

The House of Commons debated the remaining stages of the Finance Bill, with the government introducing more than 50 amendments to Part 2 of the Bill concerning non-domiciled individuals. Opposition efforts to reverse the decision to impose VAT on private schools, as well as calls for additional impact assessments for the bill’s measures, were unsuccessful.

The Shadow Exchequer Secretary, James Wild (Con), and Liberal Democrat Treasury spokesperson Daisy Cooper both drew on CIOT's briefing on the non-dom amendments during their remarks. Cooper encouraged the minister to meet with CIOT and “heed its warnings to ensure that measures are properly drafted”.

19 March 2025

Finance Bill 2024-25 House of Lords debate (all stages)

Report to follow

Royal Assent expected before the end of March

Further resources

Text of the Bill (original and as amended), explanatory notes, amendment papers and other documents related to the Bill’s passage are available on the Parliament website.

Government resources including explanatory notes on government amendments are available on Gov.uk