The Finance Bill 2022-23

The government recently published draft legislation for the Finance Bill 2022–23, which covers changes to capital gains tax, R&D tax relief, and pensions, amongst other subjects.
We’ve covered the key points you need to know.
Capital Gains Tax: Divorcing Couples
When a married couple gets divorced, their assets are distributed between them both, which often includes a share of the value of their home. Currently, these transfers are only free of capital gains tax if they occur within the same tax year as the separation.
Between that date and the decree nisi, the couple are still considered connected persons but are not living together, so the capital gains tax no gain/no loss treatment for transfers between married couples or civil partners does not apply.
Proposals in the Finance Bill 2022–23 will stretch this capital gains tax exemption period to 3 years for couples that are separating, allowing any assets within the divorce agreement to be transferred on a no-gain, no-loss basis without a time limit.
This will apply to all disposals that occur on or after the 6th April 2023.
Capital Gains Tax: Land and Homes
A second capital gains simplification has been applied to land and homes exchanged by LLPs or Scottish partnerships, allowing roll-over relief and private residence relief to apply to any gains arising.
This change is back-dated to the 23rd March 2022.
Pension Tax Relief
Under auto-enrolment, many low-paid employees pay pension contributions but don’t earn enough to pay income tax. This means they are missing out on the tax relief that is available to taxpayers who get their pension contributions deducted from their net pay, as they get the same tax relief as if their employer operates a relief at a source scheme.
From the tax year 2024/25 and onwards, employees who are on net-pay schemes will be able to claim a rebate on the tax relief they are due from the government.
R&D Tax Relief
The finance bill will further previous consultations on strengthening the R&D tax relief scheme to make it less vulnerable to fraud.
Small businesses who want to claim R&D tax relief will now have to inform HMRC of their intention to claim within 6 months of the end of the first period the claim relates to. A senior officer of the company and the tax advisor will both need to be named on the claim.
International Tax
Large, multinational companies will need to pay a minimum of 15% tax in each jurisdiction they operate in under the OECD Pillar 2 proposals.
With effect from the 31st December 2023, the Finance Bill 2022-23 will include a new multinational top-up yax that ensures this minimum level of tax applies in the UK.
Businesses will also be required to keep evidence of transfer pricing decisions in a standardised format, as set out in the OECD transfer pricing guidelines.
Amended Levies
4 aggregate levy exemptions will be refined into one general exemption, and one other exemption for construction sites will be restricted.
The soft drinks levy will be extended to drinks dispensed from fountain machines.
The bands for air passenger duty will be changed to reduce the domestic band and add a higher band for ultra-long-haul flights.
Clarifications
2 areas of tax treatment have been clarified in the Finance Bill.
Farmers who take payment from the lump sum exit scheme (LSES) will now have the payment tax as a capital gain.
Companies that are allowing their residential properties to be used for the Homes for Ukraine scheme will be exempt from ATED and the 15% rate of SDLT on these properties.
Consultations
2 new consultations were also announced: new powers for business data collection by HMRC and the digitalisation of business rates including linking that data to the wider tax system.
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