07 Sep 2016

Finance Bill finishes third reading in the House of Commons

The Finance Bill 2016 completed its third reading in the House of Commons yesterday (6th), and has now been passed on to the House of Lords. As it is a money bill, its terms cannot be amended by the House of Lords so the committee stage, report stage and third reading there are just formalities. 

The first reading in the Lords also took place yesterday and the second reading and remaining stages are scheduled for 13th September, after which the Bill should receive Royal Assent.

Thus as of today the Bill has been “substantively enacted” for the purposes of IFRS and UK GAAP, and the rates set out in the Bill can now be applied. For ring fence companies the Bill confirms the 0% rate of PRT enacted under the Provisional Collection of Taxes Act (in section 140 of the Bill) and applies the Supplementary Charge rate of 10% with effect from 1st January 2016 (section 58 of the Bill).

For companies who do not have a December year end the profits of the accounting period straddling 1st January 2016 are apportioned on a time basis.

For companies that report their results quarterly, the quarter to 30th September will reflect the lower rate of SCT.

Our comment: 

Although the reduction in tax rates is welcome overall, for many companies this will result in a tax charge resulting from the reduction in value of their losses carried forward.

 


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