Finance Bill 2024-25 Public Bill Committee Preview

The committee will consider the following clauses and schedules. Amendments tabled by the government and others are summarized with each group but can be viewed in full here (and if viewing Monday 27 January or later check here for the latest version.

This note excludes clauses debated in Committee of Whole House (see debate here).

Reports on the debates will appear on the CIOT website in the days following.

Part 1 – Income tax, capital gains tax and corporate taxes

Clauses 1-4 set income tax charges and rates, as the Finance Bill does every year. 

Clauses 5 and 6 relate to the cash equivalent of the benefit of a company car made available for private use.

Clauses 13 and 14 set the corporation tax rate at 25% and the small profits rate at 19% for financial year 2026.

Clause 19 relates to Pillar Two of the OECD/G20 International Framework. It introduces schedule 4 which introduces the 'undertaxed profits rule' into UK legislation. UTPR is the UK’s adoption of the third and final Pillar 2 rule collectively giving effect to a global minimum tax rate of 15%. The schedule also makes miscellaneous amendments to the existing Multinational Top-Up Tax and Domestic Top-Up Tax legislation including in respect of transitional safe harbours.

31 government amendments have been tabled to schedule 4. Among other things these:

• correct errors in the calculation of multinational top-up tax payable under the UTPR provisions that would have resulted in an excessive liability;
• secure that eligible payroll costs and eligible tangible asset amounts are allocated from flow-through entities in a manner that is consistent with the Pillar Two model rules;
• make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures

Clause 20 repeals legislation on offshore receipts in respect of intangible property (ORIP) because Pillar Two means it is no longer needed. Clause 21 makes it easier to operate PAYE on UK earnings of someone who works both in the UK and overseas. Clause 22 relates to advance pricing arrangements for transfer pricing. 

Five government amendments have been tabled to clause 21, including making it clear that legislation (new section 690) applies if an employee has been internationally mobile in a tax year, even if the employee is no longer internationally mobile.

Clauses 23-30 relate to various ‘reliefs for business’. Clauses 23 and 24 extend the 100% first-year allowance on electric vehicles and EV charging points by a year. Clause 25 introduces schedule 5 which repeals the special tax rules for commercial letting of furnished holiday accommodation. 

Clause 26-28 relate to creative industry reliefs. Clause 26 enables film and high end TV companies to claim a higher audio-visual expenditure credit on UK visual effects costs. Clause 27 aligns the circumstances in which a film, TV programme or video game meets the ‘British certification’ condition for a tax credit. Clause 28 aligns the rules on what expenditure can be included in film, TV and video game relief claims.

Clauses 29 and 30 relate to research and development relief. Clause 29 amends the relief for loss-making R&D intensive companies for companies with a registered office in Northern Ireland in some circumstances. Clause 30 amends the transitional provision in Enhanced R&D Intensive Support (ERIS) to correct an unintended effect of the legislation which may understate the intensity ratio for certain companies.

Clause 31 introduces schedule 6 which amends the tax regime for employee-ownership trusts in various ways, primarily tightening up eligibility for capital gains tax reliefs. The government is proposing six amendments including a welcome (but limited) expansion of the scope of acquisition costs that can benefit from the relief.

Clauses 32-34 relate to pensions. Clauses 32 and 33 are an attempt to prevent tax free transfers to overseas pensions from UK relieved pensions. Clause 34 requires scheme administrators of registered pension schemes to be UK resident.

Clause 35 aims to ensure that where an existing asset is used to raise finance using alternative (sharia-compliant) finance, the tax outcome is broadly the same as conventional financing. Clause 36 confirms Statutory Neonatal Care Pay is taxable as social security income. 

Part 2 – Replacement of special rules relating to domicile

Part 2 of the Bill (clauses 37-46 and schedules 8-13) removes the concept of ‘domicile’ from the UK tax system, with effect from the 2025-26 tax year. Chapter 1 puts in place a new regime for taxing the foreign income and gains (FIG) of new UK residents (“Qualifying New Residents”). Chapter 2 ends the special tax regime for those who are resident but not domiciled in the UK, with a temporary facility to encourage people to bring historic FIG into the UK over the next three years. Chapter 3 applies the changes to trusts. Chapter 4 introduces a residence-based system for inheritance tax.

22 government amendments have been tabled to Part 2. These mostly seem to be tidying up amendments although there is one to expand the scope of the onward gifting rule to circumstances where benefits are routed via individuals who are UK resident but who are not themselves within the scope of the benefits charge (because they are not the settlor or a close family member). 

These amendments do not so far include the change promised by the Chancellor at Davos to make it easier for certain funds to access the temporary repatriation facility’s flat tax rates. There is still time for this to be tabled if these clauses are not reached before Thursday, although the government may be planning to wait for report stage.

Part 3 – Other taxes

Clauses 54 and 55 make changes to the Annual Tax on Enveloped Dwellings legislation in relation to alternative property finance arrangements, to extend the scope of existing rules.

Clause 56 introduces a power to make Stamp Duty and Stamp Duty Reserve Tax changes by secondary legislation in connection with a financial market infrastructure sandbox.

Clauses 57-62 relate to inheritance tax. Clause 57 continues the freeze in IHT bands to 2030. Clauses 58-60 tighten the criteria for eligibility for the tax advantages of being an Employee Benefit Trust. Clause 61 clarifies that Agricultural Property Relief is not lost when existing agricultural land is subject to environmental management schemes overseen by public bodies. Clause 62 removes a requirement on the National Savings Bank to check with HMRC that IHT has been paid before releasing funds. 

Clauses 63 increases alcohol duty while clause 64 removes the requirements for alcohol duty stamps for retail containers of high strength alcohol products. An SNP MP has tabled an amendment to reduce the rate that applies to spirits. 

Clause 65 increases tobacco products duty.

Clauses 66-70 make various changes to vehicle excise duty. Clause 71 sets HGV road user levy rates. Clauses 72-73 increase air passenger duty for long-haul flights.

A related government new clause provides for an increase in the rate of VED applicable to haulage vehicles other than showman’s vehicles.

Clause 74-77 relate to various environmental levies, increasing the climate change levy, landfill tax, aggregates levy and plastic packaging tax generally in line with inflation. 

Clause 78 increases the soft drinks industry levy at a rate above inflation. The calculation basis is unusual insofar as it applies inflationary increases in lieu of past years where the levy rate was not increased.

Part 4 – Miscellaneous and final

Clauses 79 and 80 are anti-avoidance, targeting activity involving LLPs and loans to participators, plus some reorganisation of the loans to participators legislation.

Clause 81 provides the Treasury with powers to make regulations for the OECD’s Crypto-Asset Reporting Framework regulations, expected later this year. 

Clause 82 allows HMRC to prepare for the introduction of a new excise duty to be charged on vapes. The Conservatives have tabled an amendment which would require a digital tax stamp to be applied to e-cigarette liquids.

Clause 83 enables HMRC to prepare for the introduction of a new tax on the emissions embodied in imported goods (i.e. the UK carbon border adjustment mechanism).

Clause 84 corrects an incorrect cross-reference in existing legislation relating to alternative finance.

New clauses 

Additionally, Opposition MPs have tabled a number of new clauses, including:

• Conservative and SNP new clauses seeking an assessment of the impact of the alcohol duty changes on the hospitality sector and drinks makers 
• A Conservative new clause requiring a review of how many people receiving the new state pension at the full rate are liable to pay income tax this year and in the next four tax years
• Conservative new clauses requiring reviews of the impact of (a) increased rates of tobacco duty on the illicit tobacco market, (b) the £40,000 expensive car supplement threshold, (c) increasing Vehicle Excise Duty on HGVs, (d) increasing the soft drinks industry levy, (e) changes to air passenger duty 
• A Conservative new clause requiring a review of business taxes
• Conservative new clauses requiring the Chancellor to publish assessments of the changes in this Act on (a) the finances of households at a range of different income levels, (b) small businesses