Government Publishes Finance (No. 2) Bill 2017
The Government has launched the Finance (No. 2) Bill 2017, the second Finance Bill of the parliamentary session. The Bill will legislate for a range of changes to tax and duty legislation outlined by the Chancellor of the Exchequer at Autumn Budget 2017.
The Bill aims to benefit young people and help them with the cost of living, with a key measure being the abolition of Stamp Duty Land Tax (SDLT) for first time buyers purchasing properties worth up to £300,000, and reducing stamp duty for those buying properties worth up to £500,000.
A further focus is to protect the natural environment and improve air quality by encouraging manufacturers to produce cleaner cars. This will be achieved by increasing the amount of Vehicle Excise Duty new diesel cars pay in their first year by one band, as well as increasing existing Company Car Tax diesel supplement by 1%.
The Bill also contains measures to improve the nation’s productivity and back the UK’s innovative businesses, with measures to:
- double the annual amount an Enterprise Investment Scheme (EIS) investor can get tax relief on to £2 million, when investing in knowledge-intensive companies;
- double the amount of money that knowledge-intensive companies can receive annually through EISs and Venture Capital Trusts (VCTs) to £10 million;
- stopping tax reliefs from being claimed for low-risk investments, re-directing funds towards the UK’s risk-taking growing companies; and
- increasing the rate of R&D Expenditure Credit (RDEC) from 11% to 12%, ensuring companies can receive more support for research and development.
The Finance Bill is also designed to ensure that the tax system is fair and fit for purpose, with the Bill making provisions to remove the indexation allowance – a relief for inflation that provides benefits to companies that are not available to individuals. Measures to tackle tax avoidance, evasion, and non-compliance include:
- closing loopholes in the anti-avoidance rules for offshore trusts, so that people cannot avoid paying UK tax on the benefits they withdraw from their offshore trusts;
- preventing companies from claiming unfair tax relief on their intellectual property;
- reducing online VAT evasion by making online marketplaces take more responsibility for the unpaid VAT of their sellers;
- tackling the use of disguised remuneration;
- ensuring companies are not able to claim relief for losses on the disposal of shares that do not reflect losses incurred by the wider group; and
- extending landfill tax to illegal waste sites to crack down on rogue landfill site operators.
Commenting on the Bill’s publication, Financial Secretary to the Treasury Mel Stride said:
‘The UK must have an economy that is fit for the future and this Finance Bill takes important steps to deliver just that. We are backing the innovative businesses that power our economy, helping our young people to get on the property ladder and making our tax system fairer so that we can continue to fund our vital public services.’
State of the Nation 2017 Report Published
The Social Mobility Commission’s fifth annual State of the Nation report finds that there is a stark social mobility geographical divide in the UK. Britain’s deep social mobility problem, for this generation of young people in particular, is getting worse not better, with some parts of the country are far more conducive to social mobility than others. The chances of someone from a disadvantaged background getting on in life is closely linked to where they grow up and choose to make a life for themselves. It has been commonplace in recent decades to think of this geographical divide in terms of a north/south divide. The Social Mobility Index paints a more complex picture than that and finds a stark social mobility postcode lottery.
The analysis identifies five key trends:
- The biggest divide is between London (and the commuter belt areas around it) and the rest of the country.
- Inner cities are no longer the worst performing areas for social mobility, though they are not yet the engines of social mobility they have the potential to be.
- The new social mobility coldspots are concentrated in remote rural or coastal areas and in former industrial areas, especially in the Midlands.
- There is no direct correlation between the affluence of an area and its ability to sustain high levels of social mobility.
- Local policies adopted by local authorities and employers can positively influence outcomes for disadvantaged residents.
The report sets out a series of recommendations to both improve and accelerate the progress of social mobility, including the following:
- Every local authority should develop an integrated strategy for improving disadvantaged children’s outcomes and Pupil Premium funds should be invested in evidence-based practice.
- Local authorities should support collaboration between isolated schools, subsidise transport for disadvantaged young people in isolated areas and encourage Local Enterprise Partnerships (LEP) to follow the North East LEP’s approach to improving careers support for young people.
- Local authorities should all become accredited Living Wage employers and encourage others in their communities to do likewise.
- Central government should launch a fund to enable schools in rural and coastal areas to partner with other schools to boost attainment.
- Regional School Commissioners should be given responsibility to work with universities, schools and Teach First to ensure that there is a good supply of teachers in all parts of their regions.
- The Department for Business, Energy and Industrial Strategy should match the Department for Education’s £72 million for the opportunity areas to ensure there is a collaborative effort across local education systems and labour markets.
- Central government should rebalance the national transport budget to deliver a more equal share of investment per person and contribute towards a more regionally balanced economy.
The report acknowledges the need for ongoing investment in education, transport, housing and employment to improve local prospects of social mobility. Overall there is currently a mismatch between where public money goes and where it is most needed. It suggests that government should set out a new objective over a ten-year period to target an increasing proportion of public resources into those parts of the country that have been most left behind. The focus should be on local areas, rather than simply economic regions, since the new social mobility lottery highlighted in the report is based on specific areas of the country.
The Commission also calls on government to report annually on the progress it is making and on how the balance of spending is changing within regions as well as between them.