The higher rate of capital gains tax (CGT) will reduce from 28% to 20% and the basic rate of CGT will reduce from 18% to 10%, both with effect for disposals on or after 6 April 2016. However, the existing rates will continue to apply to carried interest and to chargeable gains on residential property that do not qualify for the principal private residence exemption. Specific provisions will set out how to calculate the chargeable gain on disposals of mixed-used properties. The rate of CGT on ATED-related gains will remain at 28% (see Practice note, Capital gains tax charge relating to annual tax on enveloped dwellings (ATED)).

The changes are intended to incentivise investment and to ensure that the UK remains a competitive environment for entrepreneurial activity.

For information on CGT, see Practice note, Tax on chargeable gains: general principles.

(See HMRC: Changes to Capital Gains Tax rates: TIIN, HM Treasury: Budget 2016, paragraphs 1.171 and 2.187, HM Treasury: Business tax road map, paragraphs 2.21-2.22 and Overview, paragraph 1.46.)

On the incorporation of a business, entrepreneurs' relief (ER) will be allowed to a former partner in relation to the goodwill if he receives less than 5% of the shares and voting rights in the new company. Relief will also be due if the transfer of the business is part of arrangements for the company to be sold to a new independent owner. The change will be backdated to 3 December 2014, the date on which the current version of the legislation took effect.

For information on the current restrictions on claims for ER on incorporation, see Practice note, Entrepreneurs' relief: Incorporation of a sole tradership or partnership.

(See HMRC: TIIN: Capital Gains Tax: changes to rules to extend availability of Entrepreneurs' Relief on goodwill on incorporation, HM Treasury: Budget 2016, paragraph 2.190 and Overview, paragraph 1.48.)

To encourage investment in unlisted trading companies, the government has announced that ER will be available to individuals who subscribe for new shares in such companies on or after 17 March 2016 and hold those shares for at least three years from 6 April 2016.

Since the introduction of ER, the qualifying criteria (other than for shares acquired on exercise of an Enterprise Management Scheme option) have been a 5% holding and the status of employee of officer of the company for a period of 12 months ending on the date of disposal. This change broadens the scope of the relief, giving long-term investors the opportunity to benefit from a tax rate of 10% on gains up to a lifetime limit of £10 million.

It is unclear from the information available whether gains realised by the individual in their capacity as an employee and on which they have already claimed ER will be taken into account in the lifetime limit or whether a separate investor lifetime limit will apply.

(See HMRC: Capital Gains Tax: Entrepreneurs' relief: extension to long-term investors: TIIN, HM Treasury: Budget 2016, paragraphs 1.27, 1.172 and 2.188, HM Treasury: Business tax road map, paragraph 2.23, HM Government: Budget 2016: policy costings, pages 28 and 30 and Overview, paragraphs 1.47-1.50).

Changes backdated to 18 March 2015 will partially reverse some of the amendments to the definitions of trading company and trading group introduced by the Finance Act 2015 (FA 2015) which denied ER to employees who held shares in a company that held shares in a joint venture company (JVC) but did not have a trade of its own. Relief was similarly denied by FA 2015 to shareholders in a company that was a member of a trading partnership.

For most tax purposes, members of a JVC are treated as carrying on their proportionate share of the trade of the JVC. The FA 2015 changes, which were introduced to counter perceived tax avoidance, amended the definitions of "trading company" and "trading group" to disregard participation in a JVC as a trading activity. In the 2015 Autumn Statement, the government announced that it was looking again at the measures, as it had been alerted to the fact that commercial structures were being caught unfairly.

The amendments to be introduced by the Finance Bill 2016 will make the availability of relief dependent upon the size of the individual's shareholding in a company and the size of that company's shareholding in a JVC. To qualify for ER, the individual must be entitled, directly or indirectly, to a minimum 5% share in the trading JVC. An individual who holds 20% of the shares in a company which owns 40% of a JVC will indirectly own 8% of the JVC and will therefore qualify for relief.

This amendment is welcome, but whether it goes far enough to prevent all commercial arrangements from being caught remains to be seen.

For information on ER, see Practice note, Entrepreneurs' relief.

(See HMRC: Capital Gains Tax: Entrepreneurs' Relief - changes to the treatment of joint ventures and partnerships, HM Treasury: Budget 2016, paragraph 2.192 and Overview, paragraphs 1.47-1.50.)

Individuals who are reducing their participation in a family company or partnership and, at the same time, selling to a family member a privately-owned asset that has been used in the business, will not be prevented from claiming ER on the associated disposal. The proposed change will be backdated to 18 March 2015 so that the changes introduced by FA 2015 will not prejudice genuine retirements from a family business.

ER is available on an associated disposal where a partner is disposing of at least a 5% share of the partnership or 5% of the shares in a family company of which he is a director or employee. FA 2015 changes denied relief if the disposal of the share in the partnership or shares in the company was to a family member (see Practice note, Entrepreneurs' relief). Finance Bill 2016 amendments will remove the anomaly and will also allow relief where the individual is retiring completely, and the shareholding or partnership share disposed of is not 5% but represents what remains of a previously qualifying holding.

The government has listened to feedback from taxpayers and professional bodies on the unfairness of the FA 2015 measure and has acted accordingly.

(See HMRC: Capital Gains Tax: changes to rules to extend availability of Entrepreneurs' Relief on associated disposals: TIIN and HM Treasury: Budget 2016, paragraph 2.189.)

The Finance Bill 2016 will include legislation to impose a lifetime cap on the CGT relief available for employee shareholder shares. The change applies to shares issued as consideration for entering into an employee shareholder agreement after midnight on 16 March 2016. When they are disposed of, gains up to the lifetime limit will be exempt from CGT. Gains above the lifetime limit will be chargeable to CGT in the normal way. Specific rules will apply to spouse and civil partner transfers to fix the transferee's base cost. The measure is expected to save up to £35 million in the tax year 2020-21.

Employees must be given a seven day period following the receipt of legal advice before an employee shareholder agreement is implemented, so it is unlikely that many arrangements not already completed could have been finalised before the end of 16 March.

For more information on employee shareholder status, see Practice note, Employee shareholders.

(See HMRC: TIIN: Capital Gains Tax: lifetime limit on Employee Shareholder Status exemption, HM Treasury: 2016 Budget, paragraphs 1.226 and 2.193, HM Government: Budget 2016: policy costings, page 29 and B15 and B19 and Overview, paragraph 1.52.)

Higher rates of SDLT will apply to acquisitions of additional residential properties (such as second homes and buy-to-let properties) with an effective date on or after 1 April 2016. The higher rates will be 3% above the current SDLT rates for residential property, so that the following rates will apply on a progressive basis:

*If the chargeable consideration is less than £40,000, the additional 3% SDLT charge will not apply. However, if the chargeable consideration is £40,000 or more, the total amount (up to £125,000) will be chargeable at 3%.

This measure was first announced in the 2015 Autumn Statement and a consultation was launched on 28 December 2015 until 1 February 2016 (see Legal updates, 2015 Autumn Statement and Spending Review: key business tax announcements: Increased SDLT rates for second homes and buy-to-let properties and SDLT consultation on higher rates for additional residential properties).

Broadly, the increased SDLT rates will apply if the transaction is a higher rates transaction. A transaction entered into by an individual will be a "higher rates transaction" if any of the following conditions are satisfied:

A transaction entered into by a buyer that is not an individual will be a "higher rates transaction" if either:

A "major interest" for these purposes does not include leases that were originally granted for a period of seven years or less. A "dwelling" is a building (or part of a building) that is suitable for use as a single dwelling or in the process of being constructed or adapted for such use. It also includes the garden or grounds and any land that subsists for the benefit of the dwelling. HMRC's guidance states that transactions in a garden, grounds or such land will not be subject to the increased rates if the dwelling is not also acquired by the buyer. However, this is not clear from the legislation.

A dwelling will be a replacement of an individual's only or main residence if the buyer intends that dwelling to be their only or main residence and the buyer sold their previous only or main residence in a three-year period (increased from 18 months as proposed in the consultation) ending on the effective date of the purchase of the new dwelling, provided that no other only or main residence was acquired in the interim period. In these circumstances the increased SDLT rates will not apply. For transactions with an effective date before 26 November 2015, this three-year period commences on the later of 25 November 2015 and the date of sale of the previous residence.

A dwelling may, at a later date, be a replacement of an individual's only or main residence if the buyer intends that dwelling to be their only or main residence and, within a three-year period (increased from 18 months as proposed in the consultation) beginning on the effective date of the purchase of the new dwelling, the buyer sells an existing only or main residence. In these circumstances, the increased SDLT rates will apply to the purchase of the new dwelling. However, the buyer may reclaim any overpaid SDLT once the existing only or main residence is sold.

For these purposes, spouses and civil partners will be treated as one unit, so that they are entitled to one main residence between them, unless they are separated in circumstances that are likely to be permanent. The government proposed in its consultation document that this treatment would apply until the parties were separated under a court order or by a formal deed of separation. However, following responses to the consultation, this has been amended so that it is in line with the capital gains tax treatment.

As proposed in the consultation, a transaction entered into by joint owners will be a higher rates transaction if the conditions set out above apply to any of the buyers. Persons who are beneficially entitled to property under a bare trust and beneficiaries of trusts who have a life interest or interest in possession in a residential property will be treated as the buyers, holders and sellers of dwellings (as appropriate).

Following responses to the consultation, the government has dropped the proposed exclusion from the increased rates for large scale investment by investment funds and corporates. The draft legislation provides that the increased rates will not apply if an individual jointly owns an interest in a dwelling that was inherited in a three-year period ending on the effective date of the purchase of a new dwelling, provided that the individual's beneficial share in that interest does not exceed 50%.

The legislation will be included in the Finance Bill 2016 and will insert a new Schedule 4ZA into the Finance Act 2003.

The government has published guidance on the increased rates, with a series of examples and questions and answers detailing various scenarios. An online calculator that calculates the amount of SDLT due on a higher rates transaction is now also available on HMRC's website.

It is encouraging that the legislation has taken into account some of the responses to the consultation, in particular, concerns related to the increased SDLT rates applying to individuals who inherit a small share in a dwelling and to separated and divorcing couples. However, it is disappointing that the legislation provides for a pay now, reclaim later approach if a property chain breaks down. This is likely to cause difficulties for buyers who will need to find additional financing to pay the increased SDLT rate for the interim period, and could arguably affect those with lower incomes more than those with higher incomes who might have more easy access to additional cash.

We will be publishing a practice note on the increased rates in due course.

(See HMRC: TIINs: Stamp Duty Land Tax: higher rates for purchases of additional residential properties and Stamp Duty Land Tax: buying an additional residential property, HM Treasury: Consultation on higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties, HM Treasury: Budget 2016, paragraphs 1.125-1.127 and 2.183, HM Government: Budget 2016: policy costings, page 42 and Overview, paragraph 1.59.)

With effect from 17 March 2016 (subject to transitional rules), the SDLT rates structure for sales of and grants of leases in, non-residential and mixed property will be changed. The effect of the changes will be that, for sales and grants of leases of such property, the same or less SDLT will be payable if the non-rental consideration is £1.05 million or less and, in the case of SDLT on rent, leasehold transactions with an NPV of up to £5 million will pay the same SDLT as under the current rate structure. However, for higher value transactions, the SDLT charge will increase. These measures will be included in the Finance Bill 2016, but be subject to a resolution under the Provisional Collection of Taxes Act 1968.

For sales, the new rates structure adopts the fairer "slice" system under which that part of the entire consideration falling within a particular band is taxed at the rate applicable to that band (the slice system already applies for rent consideration). This replaces the existing "slab" system under which SDLT is levied at a single rate on the chargeable consideration for the transaction. The new rates for sales and lease premiums (non-rent consideration) are as follows.

Additionally, paragraph 9A of Schedule 5 to the Finance Act 2003 will be repealed with effect from the same date. This means that the nil rate band will apply to all leases, including those with an annual rent of £1,000 or more.

A new 2% rate for rent consideration paid on the grant of a lease is introduced from 17 March 2016. The new rates for rent consideration are as follows.

Under transitional rules, these measures do not have effect in relation to a transaction if the buyer elects and either of the following apply:

The new rates structure gives rise to complications in relation to linked transactions (where a transaction taxed under the old rates structure may be linked with one taxed under the new structure) and for certain types of lease transactions. HMRC's guidance note addresses some of these situations.

For information on the existing SDLT rates structure, see Practice note, SDLT and stamp duty rates (for land).

(See HMRC: Stamp Duty Land Tax: reform of charging provisions for non-residential property, HMRC: Guidance: Stamp Duty Land Tax: reform of structure, rates and thresholds for non-residential land transactions, HM Treasury: Budget 2016, paragraphs 1.179-1.183 and 2.186, HM Treasury: Business tax road map, paragraphs 2.51-2.55 and HM Government: Budget 2016: policy costings, pages 25 and 26.)

The government has confirmed that the Finance Bill 2016 will include a relief from the 15% rate of SDLT for equity release schemes (home reversion plans) and will expand existing reliefs to include certain property development activities and employee occupation not currently covered. These measures were originally announced in the 2015 Autumn Statement (see Legal updates, 2015 Autumn Statement and Spending Review: key business tax announcements: 15% SDLT charge: extension of reliefs and Draft Finance Bill 2016 legislation: key business tax measures: 15% SDLT charge: new and extended reliefs). Changes of a "minor technical nature" will be made to the draft measures previously published.

(See HM Treasury: Budget 2016, paragraph 2.185 and Overview, paragraph 1.61.)

The government has confirmed its 2015 Autumn Statement announcement that it will include in the Finance Bill 2016 a relief from the annual tax on enveloped dwellings (ATED) for equity release schemes (home reversion plans) and will extend the reliefs available for property development and properties occupied by employees (see Legal update, 2015 Autumn Statement and Spending Review: key private client announcements: ATED: extension of reliefs). These will apply for chargeable periods beginning on or after 1 April 2016. Some amendments are to be made to the draft legislation that was previously published (see Legal update, Draft Finance Bill 2016 legislation: key private client measures: ATED: new and extended reliefs), which are of a minor technical nature.

For more information on ATED, see Practice note, Annual tax on enveloped dwellings (ATED).

(See HM Treasury: Budget 2016, paragraph 2.185 and Overview, paragraph 1.61.)

From 6 April 2017, the personal income tax allowance will increase to £11,500 and the basic rate limit will increase to £33,500 raising the higher rate threshold to £45,000 in 2017-18. The NICs upper earnings and upper profits limits, which are aligned with the higher rate threshold, will also increase.

For information on income tax rates and allowances, see Practice note, Tax data: income tax. For information on NICs, see Practice note, Taxation of employees: National insurance contributions.

(See HMRC: Income tax: personal allowance and basic rate limit for 2017 to 2018: TIIN, HM Treasury: Budget 2016, paragraphs 1.82-1.85, 2.20 and 2.21, HM Government: Budget 2016: policy costings, page 8 and Overview, paragraph 1.1.)

The government has confirmed that it will introduce a personal savings allowance (PSA) of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers from 6 April 2016.

HMRC states that the draft clause published on 9 December 2015 has been amended following consultation to clarify:

The amended clause has not been published, but the Finance Bill 2016 will be published on 24 March 2016.

For more information and to follow future developments, see Private client tax legislation tracker 2015-16: Income tax: personal savings allowance.

(See HM Treasury: Budget 2016, paragraph 2.58 and Overview, paragraph 1.2 and page 22.)

The government has announced that it is introducing income tax rates that apply to savings that are separate from the main rates that apply to income that is neither savings income nor dividend income. The change will mean that the basic, higher and additional rates that currently apply to UK savings will become the:

The government will also introduce a "default rate" of income tax that will apply to the non-savings, non-dividend income of a very narrow category of taxpayers (primarily trustees and non-residents) that fall into neither the UK main rates or savings rates or the Scottish rates of income tax.

The UK main rates will apply to the income of UK resident individuals that is neither savings nor dividend income. Those rates will not apply to Scottish residents or those subject to the default rate of income tax.

The proposals are intended to ensure that the "English Votes for English Laws" procedure can apply to the main rates of income tax.

At present, UK income tax rates apply across the whole of the UK to non-savings, non-dividends income, dividend income and savings income. It has now become necessary for these to be separated out, given that from April 2017, Scotland will have full control over the rates and thresholds of income tax for non-savings and non-dividend income of Scottish taxpayers.

Legislation to implement these measures will be introduced in the Finance Bill 2016 and will take effect from 6 April 2017.

(See HMRC: Applying 'English Votes for English Laws' to Income Tax: TIIN, HM Treasury: Budget 2016, paragraphs 1.261 and 2.22 and Overview, paragraph 1.3.)

The Finance Bill 2016 will repeal the wear and tear allowance and replace it with a new relief allowing landlords to deduct the actual costs of replacing furniture, furnishings, appliances and kitchenware in a let dwelling when calculating their tax liability.

This measure was first announced in the July 2015 Budget (see Private client tax legislation tracker 2015-16: Income tax: wear and tear allowance).

The new relief will apply to expenditure incurred on or after 1 April 2016 for corporation taxpayers and 6 April 2016 for income taxpayers. The relief will apply to expenditure incurred on an item that is substantially the same as the item being replaced and on costs incurred in disposing of, or less any proceeds received for, the item being replaced.

The government has announced that, following technical consultation, the draft legislation will be amended so that:

(See HM Treasury: Budget 2016, paragraph 2.28 and Overview, paragraph 1.23.)

The rules that restrict an individual landlord from claiming relief for mortgage interest payments when calculating the profits of a residential property business and instead allow the individual to claim a basic rate tax reduction against their tax liability will be amended by legislation to be contained in the Finance Bill 2016. The amendments will provide that:

The amendments will also ensure that beneficiaries of a deceased's estate will be entitled to the basic rate tax reduction.

The rules restricting relief for finance costs for landlords and introducing the basic rate tax reduction were introduced by the Finance (No. 2) Act 2015, following an announcement in the July 2015 Budget (see Private client tax legislation tracker 2014-15: Income tax: mortgage interest relief).

(See HMRC: TIIN: Clarification to finance costs restriction for landlords, HM Treasury: Budget 2016, paragraph 2.27 and Overview, paragraph 1.22 and Annex A, page 78.)

From April 2017, there will be two new allowances that will exempt from tax the first £1000 of an individual's trading and property incomes. Where an individual's trading or property income falls beneath the threshold, there will be no requirement to declare the income for tax purposes. Individuals whose trading or property income exceeds the allowance will be able to elect whether to deduct expenses in the normal way or, in the alternative, to claim the relevant allowance.

The legislation will be in the Finance Bill 2017.

(See HM Treasury: Budget 2016, paragraphs 1.170 and 2.25, HM Government: Budget 2016: policy costings, page 32, HM Treasury: Business tax road map, paragraph 2.14 and Overview, paragraph 2.14.)

The government has confirmed that from April 2017 all income from sporting testimonials and benefit matches for employed sportspersons will be liable to income tax. This measure was first announced in the March 2015 Budget and follows on from HMRC's review of extra-statutory concessions.

The government has also announced that the proposed "one-off" exemption of £50,000 for employed sportspersons with income from sporting testimonials that are not contractual or customary, has been increased to £100,000.

For further background and to follow future developments see Private client tax legislation tracker 2015-16: Income tax: sporting testimonials.

(See HMRC: Income Tax: update to - treatment of income from sporting testimonials: TIIN, HM Treasury: Budget 2016, paragraph 2.30 and Overview, paragraph 1.8.)

The Finance Bill 2017 will abolish the requirement to deduct income tax at source from:

These changes will have effect from 6 April 2017.

This measure aims to bring the withholding treatment of these types of interest into line with the withholding treatment of interest paid by banks and building societies on the introduction of the personal savings allowance (see Private client tax legislation tracker 2015-16: Income tax: personal savings allowance). For those whose savings income all falls within the personal savings allowance, this will be a simplification measure as there will be no need to reclaim tax withheld. For others, there will be a need to account for tax that would otherwise have been withheld from amounts exceeding the allowance, but the alternative would have been reclaiming tax withheld on amounts within the allowance (which would, perhaps, have been just as burdensome) and abolishing withholding means that tax is paid later, giving a potential cash-flow advantage to taxpayers.

(See HM Treasury: Budget 2016, paragraph 2.56, HM Government: Budget 2016: policy costings, page 10 and Overview, paragraph 2.11.)

As announced in the 2015 Autumn Statement, a new income tax exemption will be introduced for certain pension and annuity payments made to Dutch subjects or nationals by the Netherlands government. The exemption will cover payments made to victims of national-socialist and Japanese aggression during World War II.

For more information and to follow the progress of this measure, see Private client tax legislation tracker 2015-2016: Income tax: Netherlands payments to WWII victims.

(See HM Treasury: Budget 2016, paragraph 2.33.)

The government confirmed that it will respond in due course to the Office of Tax Simplification's (OTS) review into the potential for closer alignment of income tax and NICs. (For the review, see Legal update, OTS tax and NICs alignment review.) However, it will commission the OTS to review the impacts of two of its proposals: moving employee NICs to an annual, cumulative and aggregated basis, and moving employer NICs to a payroll basis.

(See HM Treasury: Budget 2016, paragraphs 1.188, 2.207 and 2.215 and Overview, paragraphs 2.63-2.64.)

The government has confirmed that it is committed to delivering Welsh rates of income tax, alongside the devolution of other powers to Wales. For our coverage of Welsh devolution, see Toolkit, Welsh devolution.

(See HM Treasury: Budget 2016, paragraph 1.273.)

In the light of concerns about the growth of salary sacrifice arrangements, the government announced that it is considering limiting the benefits that attract tax and NICs advantages when provided as part of a salary sacrifice arrangement. The government confirmed, however, that salary sacrifice for enhanced employer pension contributions, childcare benefits and health-related benefits, such as the cycle to work scheme, would continue to benefit from tax and NICs relief if provided through salary sacrifice.

For an overview of salary sacrifice arrangements, see Practice note, Salary sacrifice arrangements.

(See HM Treasury: Budget 2016, paragraphs 1.147 and 2.35 and Overview, paragraph 2.4.)

The Budget announces that, from 6 April 2017:

Adults under 40 will be able to open a Lifetime ISA. The government will add a 25% bonus to contributions of up to £4,000 each year before the ISA holder reaches 50. Therefore, the maximum amount of contributions attracting a bonus will be £128,000 and the maximum bonus £32,000 (plus investment growth as the bonus is paid each year). Additional contributions can be made without a bonus (subject to the overall annual subscription limit).

Funds can be withdrawn after the ISA has been open for at least a year. To benefit from the bonus, they must be used to buy the ISA holder's first home, or withdrawn when the holder is at least 60 or has been diagnosed with terminal ill health. A first home must be in the UK with a value up to £450,000. Two or more buyers can each use their own Lifetime ISA with bonus when buying together. The detailed rules will be based on Help to Buy (HTB) ISAs.

If funds are withdrawn in any other circumstances, the ISA holder will lose the government bonus and pay a 5% charge. However, the government will consider whether to allow withdrawals including the bonus for other specific life events and whether to allow borrowing against the ISA without a charge if the borrowed funds are fully repaid (along the lines of some US retirement plans).

As for other ISAs, a Lifetime ISA will be subject to inheritance tax on the holder's death and a surviving spouse or civil partner's Lifetime ISA allowance will be increased by the amount of the deceased holder's ISA at death.

Qualifying investments for Lifetime ISAs will be the same as for cash or stocks and shares ISAs. The overall annual subscription limit of £20,000 will apply to an individual's total contributions to cash ISAs, stocks and shares ISAs, Lifetime ISAs and Innovative Finance ISAs.

During the tax year 2017-18 only, a person who already has an HTB ISA will be able to transfer the funds to a Lifetime ISA without funds contributed before 6 April 2017 counting towards the Lifetime ISA limit. Subject to this, individuals can have an HTB ISA in addition to other types of ISA. However, a saver who holds both an HTB ISA and a Lifetime ISA can only benefit from the government bonus on one of them when buying a first property. If they take the bonus on the HTB ISA, they will also pay a charge on withdrawal from the Lifetime ISA (unless they have reached 60 or are terminally ill). HTB ISAs will remain available for new savers until 30 November 2019, as planned, and contributions can be made until 2029.

The government will bring forward legislation to implement the Lifetime ISA in autumn 2016 after discussions with the industry.

The Lifetime ISA is intended to be a simple product that harnesses the popularity of ISAs to address the issue of young people not saving enough, which is partly because they currently have to choose between saving for their first home and saving for retirement. It is also designed to allow more flexible retirement saving for the self-employed. Although the government has backed down from radical pension reforms for now, the suspicion must be that it is testing the water.

For more information about the current rules and previous announcements, see Tax data: individual savings accounts and Private client tax legislation tracker 2015-16: ISAs: flexibility and new ISA types.

(See HM Treasury: Lifetime ISA - explained, HM Treasury: Design of the Lifetime ISA: technical note, HM Treasury: Budget 2016, paragraphs 1.104-1.112, 1.168 and 2.50 and HM Government: Budget 2016: policy costings, page 9 and paragraphs B.15 and B.28.)

The government has announced that it will introduce a new saving scheme, to be effective no later than April 2018, to encourage individuals in low income working households to save. Participants will be able to save up to £50 a month into a Help to Save account and receive a 50% government bonus after two years. Account holders can then choose to continue saving under the scheme for a further two years. The scheme will be open to all adults in receipt of Universal Credit with minimum weekly household earnings equivalent to 16 hours at the National Living Wage or those in receipt of Working Tax Credits. The government estimates that the scheme will be open to 3.5 million people when it is rolled out.

(See HM Treasury: Budget 2016, paragraph 2.52, and HM Government: Budget 2016: policy costings, page 62.)

The Budget contained the following pensions-related announcements of interest to private client practitioners:

For more detail on these measures and links to the source materials, see Legal update, March 2016 Budget: key pensions announcements.

The government has announced that from April 2017, it will exempt war pension payments made to injured veterans from the social care means test in England. This measure has not previously been announced.

For information on the charging regime for adult social care in England, see Practice note: Costs under the Care Act 2014 toolkit.

We will be following the progress of this measure in Private client tax legislation tracker 2015-2016.

(See HM Treasury: Budget 2016, paragraph 2.19.)

The government will consult in 2016 on changing the current tax rules for part surrenders and part assignments of life insurance policies with a view to introducing legislation in Finance Act 2017 to prevent excessive tax charges arising on these products (as to which, see Practice note, Income tax: calculation of income profits: Gains from contracts for life insurance, life annuities and capital redemption and Legal updates, Partial surrender of insurance bond caused immediate tax charge (First-tier Tribunal), First-tier tribunal considers "unfair" taxation of part surrendered offshore insurance policy and Rectification on grounds of mistake available for partial surrender of insurance policies (Upper Tribunal)).

(See HM Treasury: Budget 2016, paragraph 2.113 and Overview, paragraph 2.21.)

The government will consult in 2016 on changes to the categories of assets that life insurance policyholders can choose to invest in without giving rise to an annual tax charge under the personal portfolio bond legislation (as to which, see Legal update, First-tier tribunal considers "unfair" taxation of part surrendered offshore insurance policy: Personal portfolio bonds). Any resulting legislation will be introduced in Finance Bill 2017.

(See HM Treasury: Budget 2016, paragraph 2.115 and Overview, paragraph 2.22.)

Legislation will be introduced in the Finance Bill 2016 to ensure that certain changes made to the EIS and VCT legislation by the Finance (No. 2) Act 2015 work as intended. The Finance (No. 2) Act 2015 introduced a raft of changes including a new maximum age condition and the concept of a "knowledge intensive company", which must satisfy an operating costs condition (among other things). The conditions are tested over a five year (maximum age condition) or three year (knowledge intensive company operating costs condition) period. For discussion, see Practice note, Enterprise Investment Scheme (EIS): Maximum age limit and Knowledge-intensive companies, and Practice note, Venture Capital Trusts: Maximum age limit and Knowledge-intensive companies.

The Finance Bill 2016 amendments will ensure that the relevant periods end immediately before the beginning of the company's last accounts filing period unless the end of that period falls more than 12 months before the date on which the investment is made. In that case, the periods will end 12 months before the date on which the investment is made. This measure will take effect for shares issued or investments made on or after 18 November 2015 unless an election is made for the existing legislation to apply, in which case the measure will take effect for shares issued or investment made on or after 6 April 2016.

The Finance Bill 2016 will also amend the VCT approval conditions (as to which, see Practice note, Venture Capital Trusts: Conditions for approval of VCTs) to introduce a new condition specifying the non-qualifying investments that a VCT may make. This measure will take effect from 6 April 2016.

The government also confirmed its 2015 Autumn Statement announcement that all remaining energy generation activities will become excluded activities for the purposes of the venture capital schemes (EIS, VCT, and SEIS) with effect from 6 April 2016.

(See HMRC: Income Tax: Enterprise Investment Scheme and Venture Capital Trusts: TIIN, HM Treasury: Budget 2016, paragraphs 2.46 and 2.47 and Overview, paragraph 1.24.)

The government has finalised for the Finance Bill 2016 the "income-based carried interest" rules that determine when asset managers pay capital gains tax rather than income tax on their performance related returns (carried interest). These new rules are designed to ensure that carried interest is taxed as a capital gain only when the fund undertakes long-term investment activity (with investment horizons greater than three years). The new rules will apply in relation to sums arising to managers on or after 6 April 2016.

Eligibility for capital gains tax treatment will be determined by the length of time for which the underlying scheme holds its investments on average. Full CGT treatment will apply where the average hold period is 40 months or more (rather than the 48 months set out in the December 2015 draft legislation). Additional bespoke calculation rules will also be included for additional asset classes, including venture capital and real estate, together with other minor changes.

For a discussion of the draft Finance Bill 2016 legislation, which applies from 6 April 2016, see Practice note, Income-based carried interest: tax.

(See HM Treasury: Budget 2016, paragraphs 1.225 and 2.104, HM Government: Budget 2016: policy costings, page 47 and Overview, paragraph 1.26.)

The government has announced that it will legislate in the Finance Bill 2016 to link the corporation tax rate charged on close company loans to participators to the dividend upper rate. As a result, the rate of tax charged on close company loans to participators (and other arrangements conferring benefits on participators that are taxed in the same way as loans) will increase from 25% to 32.5%, with effect for loans, advances and arrangements made on or after 6 April 2016.

The close company "loans to participators" rules are intended to stop owners of closely controlled companies avoiding tax by taking loans rather than dividends. The legislation will ensure that the rate of corporation tax charged on close company loans mirrors the new dividend upper rate, also to be introduced from 6 April 2016. For further background on the loans to participators rules, see Practice note, Close companies: tax: Close company loans and benefits to participators and for more information on the changes to dividend taxation from April 2016, see Practice note, Dividends: tax rules for individuals, exempt funds and non-residents: Proposed changes to dividend taxation from April 2016.

(See HMRC: TIIN: Corporation Tax: rate of tax for the loans to participators charge, HM Treasury: Budget 2016, paragraphs 1.151 and 2.412, HM Treasury: Budget 2016: policy costings, page 39 and Overview, paragraph 1.34.)

The government has revised the draft Finance Bill 2016 legislation proposing that shares transferred to a clearance service or depositary receipt issuer as a result of the exercise of an option will be subject to stamp duty or stamp duty reserve tax (SDRT) at a rate of 1.5% of the higher of the market value of the shares or the option strike price. The measure will now apply to options entered into on or after 25 November 2015 and exercised on or after 23 March 2016 (rather than 16 March, as originally proposed). The change will allow the measure to take effect for both stamp duty and SDRT at the same time.

For background on the proposal, which was first announced in the 2015 Autumn Statement, see Legal update, Draft Finance Bill 2016 legislation: key business tax measures: Stamp taxes on options. We are tracking the measure to implementation in Private client tax legislation tracker 2015-16: stamp taxes on share options.

(See HMRC: Stamp Duty and Stamp Duty Reserve Tax: deep In the money options, HM Treasury: Budget 2016, paragraph 2.117 and Overview, paragraph 1.62.)

Measures will be introduced, at the Report Stage of the Finance Bill 2016, to reset the basis on which non-UK resident persons without a UK permanent establishment (PE) are subject to tax on profits arising from trading in, or developing for sale, UK land. Fundamentally, the profits of a trade carried on by a company will be subject to corporation tax if the trade comprises dealing in UK land, or developing UK land with a view to disposing of it, irrespective of where the trade is carried on and whether the trade is carried on through a PE. There will also be equivalent changes for income tax.

There will be anti-avoidance rules to counter so-called fragmentation (that is, arrangements under which, broadly, the significant people functions associated with the development are performed by another non-UK resident service company and for which it is paid the majority of the profits realised on the sale of the property) and "disguised trading" (enveloping the property in an investment company, in order for the non-residents to avoid what would otherwise be a trading profit if there had been a sale of the land instead of the company). The legislation that is to be crafted will borrow its structure from the transactions in land rules (see Practice note, Tax clearances: transactions in land), with appropriate changes. The legislation will also include a targeted anti-avoidance rule that will take effect from 16 March 2016. It will apply in either of the following circumstances:

Protocols have been agreed with Guernsey, Isle of Man and Jersey, amending their treaties with the UK to support the introduction of this legislation.

The government has also stated that it will create a task force to focus on offshore property developers to improve taxpayer compliance. Comments on the issues discussed in the technical note are invited by 29 April 2016.

(See HMRC: Technical note: Profits from Trading in and Developing UK Land, HM Treasury: Budget 2016, paragraphs 1.213-1.214, 2.94-2.95, HM Treasury: Business tax road map, paragraph 2.42, HM Treasury: Budget 2016: policy costings, page 41 and B27 and Overview, paragraph 1.27).

The government will consult on the tax treatment of partnerships, including how partnerships calculate their tax liabilities. This follows on from the Office of Tax Simplification's review into partnership taxation, which highlighted uncertainties in the rules (see Practice note, Partnerships: tax: Simplification of partnership taxation). Any legislation will be included in a future Finance Bill.

(See HM Treasury: Budget 2016, paragraph 2.109 and Overview, paragraph 2.13.)

The government has announced that it will consult on streamlining the tax rules and reporting requirements for authorised contractual schemes (ACSs) later in the year. Any legislation will be included in the Finance Bill 2017 or secondary legislation.

For information on the tax treatment of ACSs, see Practice note, Authorised contractual schemes: tax.

(See HM Treasury: Budget 2016, paragraph 2.105, and Overview, paragraph 2.25.)

The government has announced that it will shortly publish a consultation on reforms to improve choice and competition in legal services by making it easier for new providers to enter the market. This may have been prompted by the Competition and Markets Authority's launch on 13 January 2016 of a market study, under the Enterprise Act 2002, into the supply of legal services in England and Wales.

(See HM Treasury: Budget 2016, paragraphs 1.256 and 2.340.)

As announced in the July 2015 Budget, the government has confirmed that measures will be included in the Finance Bill 2016 to extend the inheritance tax residence nil rate band to estates where the deceased downsized to a less valuable property or ceased to own property on or after 8 July 2015 and assets are passed to lineal descendants on death.

Following consultation, the draft legislation, which was published on 9 December 2015, will be revised to clarify when a disposal has occurred, to ensure that certain disposals made by trustees will also be taken into account, and to ensure that the provisions relating to cases involving conditionally exempt assets work as intended.

For more information see Private client tax legislation tracker 2015-2016: IHT: residence nil rate band: downsizing.

(See HM Treasury: Budget 2016, paragraph 2.64 and Overview, paragraph 1.53.)

As announced in the 2015 Autumn Statement, the government has confirmed that it will include measures in the Finance Bill 2016 to ensure a charge to inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011.

For more information, see Practice note, Inheritance tax and pension flexibility: overview: Omission to exercise right: omissions and drawdown, and to follow progress of this measure through to Royal Assent of the Finance Bill 2016, see Private client tax legislation tracker 2015-2016: IHT: designated drawdown pension funds.

(See HM Treasury: Budget 2016, paragraph 2.63.)

The government has confirmed that it will put extra statutory concession F20, which exempts from inheritance tax certain compensation and ex-gratia payments to victims of persecution during the second world war, on a statutory footing. The legislation will also extend the scope of the existing concession to include a payment made under a recently created compensation scheme known as the Child Survivor Fund and allow the Treasury to add additional payments from particular schemes in the future, so that it includes prisoners of war and civil internees, as well as victims of National Socialist persecution. The legislation, which we understand will be included in the Finance Bill 2016, will apply to deaths on or after 1 January 2015.

This measure was announced in the 2015 Autumn Statement and draft legislation was published on 9 December 2015.

For background and to follow the progress of this measure, see Private client tax legislation tracker 2015-16: IHT: enacting ESC F20 (WWII compensation payments).

(See HM Treasury: Budget 2016, paragraph 2.65 and Overview, paragraph 1.55.)

The government has announced that it will introduce measures in the Finance Bill 2016 relating to the recapture of estate duty on objects that were originally exempted from tax because of their historic or cultural importance and the exemption from inheritance tax for gifts to various public bodies listed in Schedule 3 to the Inheritance Tax Act 1984.

Where exemption from estate duty was granted before 26 March 1974, under section 40 of the Finance Act 1930, it remains in place until the object is sold. Where conditional exemption from inheritance tax is granted on the death of the owner, the earlier estate duty exemption is crystallised so that on a later sale, inheritance tax, rather than estate duty becomes payable. The Finance Bill 2016 will include a measure to allow HMRC to choose whether to charge estate duty or inheritance tax when an exempt object is sold in these circumstances. This will bring the position for deaths into line with that applying to lifetime transfers.

According to section 40 of the Finance Act 1930 estate duty is only clawed back where an exempted object is later sold. If it is lost there are currently no provisions to determine how estate duty should be charged, although inheritance tax can be charged where the loss is due to negligence. The government will introduce measures in the Finance Bill 2016 to create an estate duty charge on objects which are currently exempt, where they are subsequently lost. The charge will not be levied where the loss was outside the owner's control. This measure will apply to objects that are lost on or after the date of Royal Assent to the Finance Bill 2016.

Schedule 3 to the Inheritance Tax Act 1984 contains a list of public institutions (such as the British Museum) to which gifts are exempt from inheritance tax. The exemption includes museums and art galleries maintained by local authorities but currently this benefit is lost when a local authority transfers a museum collection to an independent charity. The government will introduce measures in the Finance Bill 2016 to extend the exemption to these collections. The power to add further public bodies to the list in Schedule 3 will be transferred from HMRC to HM Treasury. These two provisions will come into force on Royal Assent to the Finance Bill 2016.

For more information on exemption from estate duty and inheritance tax for culturally and historically significant objects, see Practice note, Inheritance tax: conditional exemption for heritage property.

(See HMRC: Estates Duty and Inheritance Tax: objects granted exemption from Estate Duty: TIIN, HM Treasury: Budget 2016, paragraph 2.62 and Overview, paragraph 1.54.)

The government has confirmed that it will legislate to allow the ISA savings of deceased persons to continue to benefit from tax advantages during the administration of their estates. The government will set out further plans for the introduction of this measure in 2016, following technical consultation with ISA providers. We understand the legislation will be included in the Finance Bill 2016.

The government originally announced in the 2014 Autumn Statement that it would look at the taxation of ISAs following the death of the original holder. This measure was subsequently announced in the 2015 Autumn Statement and draft legislation published on 9 December 2015.

For more information about the tax treatment of ISAs, see Practice note, Tax data: individual savings accounts. For background and to follow the progress of this measure, see Private client tax legislation tracker 2015-16: ISAs: estate administration.

(See HM Treasury: Budget 2016, paragraph 2.57.)

The government has confirmed a number of reforms to the taxation of non-UK domiciled individuals from April 2017, including changes to the deemed domicile rules and charging inheritance tax on UK residential property held indirectly.

The Budget document also announces that:

For information about previous announcements and the current rules, and to follow future developments, see Private client tax legislation tracker 2015-16: Permanent non-domiciled tax status abolished and IHT: UK residential property owned indirectly.

(See HM Treasury: Budget 2016, paragraph 2.44 and Overview, paragraph 2.1.)

The government has confirmed that it will consult on proposals to ensure that from 6 April 2017 all UK residential property held indirectly through an offshore structure or trust is chargeable to inheritance tax (IHT). Legislation will be introduced in Finance Bill 2017 following a consultation on the details.

The government announced that it would amend the IHT excluded property rules in the July 2015 Budget (see July 2015 Budget: key private client tax announcements: IHT on UK residential property owned indirectly by non-domiciled individuals).

To follow the progress of this development, see Private client tax legislation tracker 2015-16: IHT: UK residential property owned indirectly.

(See Overview, paragraphs 2.1 and 2.36.)

As announced in the 2015 Autumn Statement, the government will amend the CGT computations required by non-residents on the disposal of UK residential property.

The government will include measures in the Finance Bill 2016 to remove, with retrospective effect from 6 April 2015, a double charge that occurs in some circumstances when CGT is calculated on the disposal of UK residential property by non-residents. A measure will also be included in Finance Bill 2016, but with effect from 25 November 2015, to correct an omission in the current legislation.

As expected, the government will prescribe, with effect from 6 April 2015, two specific circumstances where a CGT return is not required by non-residents (see Legal update, Non-resident CGT: reporting to be made optional in prescribed circumstances). Measures to give HM Treasury rather than HMRC power to add, amend or remove circumstances and make consequential provision will also be included in the Finance Bill 2016. The government has confirmed that it will introduce measures to include CGT among the taxes that it can collect on a provisional basis.

For more information about the current rules and to follow future developments, see:

(See HM Treasury: Budget 2016, paragraph 2.194 and Overview, paragraph 1.51.)

Draft legislation for inclusion in the Finance Bill 2016 was published for consultation on 9 December 2015. The draft legislation provides for:

At the same time, it was announced that a new asset-based penalty would be introduced with draft legislation to be published in early 2016. That draft legislation has yet to be published.

These measures were confirmed at Budget 2016. It would appear that they will come into force from Royal Assent to the Finance Bill 2016. However, the vital words "Royal Assent" are missing from paragraph 1.77 of the Overview.

To track the progress of these measures, see Private client tax legislation tracker 2015-16: Offshore tax evasion: civil and criminal sanctions.

(See HM Treasury: Budget 2016, paragraphs 2.200-2.203 and Overview, paragraph 1.77.)

The Finance Bill 2017 is to impose a requirement to correct past offshore non-compliance within a defined period of time (not yet specified) to underpin a new disclosure facility. There are to be sanctions (also currently unspecified) for those that fail to meet this requirement. A formal consultation on the details of this requirement is to be launched later in 2016. This measure was announced as part of the March 2015 Budget, replacing disclosure facilities applying specifically to Liechtenstein, Jersey, Guernsey and the Isle of Man (see March 2015 Budget: key private client tax announcements: Early closure of Liechtenstein and Crown Dependency disclosure facilities).

It should come as no surprise that the government is seeking to plug further perceived gaps in the regime for offshore compliance as it is already in the process of addressing the most serious forms of offshore non-compliance (see Tax legislation tracker: compliance, disputes and investigations: Criminal liability for offshore evasion and Strengthening civil sanctions for offshore evasion).

For more information, see Private client tax legislation tracker 2015-16: Offshore disclosure facilities.

(See HM Treasury: Budget 2016, paragraph 2.203 and Overview, paragraph 2.57.)

The government has announced various changes to the business rates systems (see Legal update, 2016 Budget: key property announcements: Business rates). Some charities may benefit from changes to small business rates relief.

It has been reported in the charity sector press that Charity Tax Group (CTG) and NCVO have received much needed confirmation from HM Treasury that the 80% mandatory relief from business rates for charities will be retained. The relief is worth about £1.5 billion a year to charities. However, CTG has warned that discretionary rates relief, which some charities receive from billing authorities on top of the mandatory relief, is likely to be squeezed.

The government will publish a summary of responses to its review of business rates in England later this month. This is expected to confirm the position on mandatory rates relief for charities.

For further information about business rates relief for charities, see Practice note, Charities and business rates relief.

(See HM Treasury: Budget 2016, paragraphs 1.160-1.164 and 2.121-2.130, HM Treasury: Budget 2016: policy costings, pages 13-15 and NCVO: Budget 2016: A sigh of relief (16 March 2016).)

The government has said that the single online portal to apply to both register as a charity with the Charity Commission and to claim charity tax reliefs from HMRC will not be fully operational until March 2017. It was originally due to be implemented from 2015-16.

(See HM Treasury: Budget 2016: policy costings, paragraph B.23.)

As announced in the 2015 Autumn Statement, and following consultation on a draft clause, the government has confirmed that the Finance Bill 2016 will include a measure to ensure that a tax charge is not applied to loans or advances made by close companies to charity trustees for charitable purposes. This will apply to qualifying loans or advances that are made on or after 25 November 2015.

For more information and to track the progress of this measure, see Private client tax legislation tracker 2015-16: Close company loans to participators: charities partial exemption.

(See HM Treasury: Budget 2016, paragraph 2.43.)

As announced in the March 2015 Budget, and following consultation on a draft clause, the government has confirmed that the Finance Bill 2016 will include a measure to give intermediaries a greater role in administering Gift Aid.

HMRC has said that it will publish a technical consultation on draft regulations setting out the detailed operating models for intermediaries in early 2016 (these have not yet been published). The primary legislation on Gift Aid intermediaries will then take effect on the date that these regulations are laid in Parliament.

For more information and to track the progress of this measure, see Private client tax legislation tracker 2015-16: Gift Aid: digital giving.

(See HM Treasury: Budget 2016, paragraph 2.45.)

As announced in the 2015 Autumn Statement, the government has confirmed that all energy generation activities will be excluded from the SITR scheme, when enlarged. For more information, see Practice note, Social investment tax relief (SITR): U-turn on community energy generation.

(See HM Treasury: Budget 2016, paragraph 2.46 and Overview, paragraph 2.35.)

The government has confirmed that the Finance Bill 2016 will include a measure (previously published in draft for consultation) to ensure that charities subject to the jurisdiction of the High Court of the Isle of Man are capable of qualifying for UK VAT charity reliefs.

For more information and to track the progress of this measure, see Private client tax legislation tracker 2015-16: VAT: Isle of Man charities.

(See HM Treasury: Budget 2016, paragraph 2.153.)

The government has confirmed that it will introduce a new tax relief for museums and galleries from 1 April 2017, following a consultation during summer 2016. The relief will be available for temporary and touring exhibition costs. A measure will be included in Finance Bill 2017.

To follow the progress of this proposal, see Private client tax legislation tracker 2015-16: Corporation tax: museums and galleries.

(See HM Treasury: Budget 2016, paragraphs 1.254 and 2.87 and Overview, paragraph 2.30.)

The government has announced that the eligibility criteria for the VAT refund scheme for museums and galleries will be broadened with effect from 16 March 2016. The Department for Culture, Media & Sport (DCMS) has published guidance on the new criteria, which will enable support to a wider range of free museums from across the UK.

(See HM Treasury: Budget 2016, paragraphs 1.255 and 2.151 and DCMS: VAT refunds for museums and galleries (16 March 2016).)

The government has confirmed that it will launch a consultation on how to expand support that can be given to grassroots sport through the corporation tax system.

To follow the progress of the consultation, see Private client tax legislation tracker 2015-16: Corporation tax: contributions to grassroots sport.

(See HM Treasury: Budget 2016, paragraph 2.89 and Overview, paragraph 2.35.)

The government has committed £45 million of LIBOR banking fines over the next four years to support military charities and other good causes.

(See HM Treasury: Budget 2016, paragraph 2.15.)

The government has committed £12 million of funding raised by VAT on sanitary products to support a range of good causes benefitting women.

Within this funding, the government has also committed to grant-making partnerships with Comic Relief and Rosa Fund for Women to disburse tampon tax funding to a range of grassroots women’s organisations, in recognition of the high number of applications received from such organisations across the country.

(See HM Treasury: Budget 2016, paragraph 2.16.)

The government announced that from 2018 businesses, self-employed individuals and landlords who are keeping records digitally and providing regular digital updates to HMRC will be able to pay their tax bills "as they go" to better manage their cash flow. HMRC will consult later in 2016 on this proposal and the other elements of the government's making tax digital proposals (as to which, see Legal update, Digital tax accounting: HMRC vision to transform tax administration by 2020). The consultations will cover the use of digital tools to keep records and report information to HMRC, options to make greater use of third party data to prepopulate digital tax accounts and changes to the tax administration framework to reflect the transition to digital. Responses to these consultations will be published at the 2016 Autumn Statement and draft legislation will be included in the Finance Bill 2017.

The government will also explore options to simplify the tax rules for these groups and will provide support to businesses. In particular, it will:

To track these developments, see Private client tax legislation tracker 2015-16: Digital tax accounts to replace annual returns.

(See HM Treasury: Budget 2016, paragraphs 1.184-1.185 and 2.212, HM Treasury: Business tax road map, paragraphs 2.71, 2.72, 2.74 and 2.76 and Overview, paragraphs 2.55-2.56.)

The Finance Bill 2016 will empower HMRC to make an assessment of a person's income tax or capital gains tax liability without their first being required to complete a self-assessment return and if HMRC has sufficient information about that individual to make the assessment.

HMRC published draft legislation for consultation in December 2015 (see Private client tax legislation tracker: Self assessment: simple tax affairs). Following consultation, HMRC has increased to 60 days the time limit for customers to dispute the amount due in their assessment and has clarified the arrangements for interest and late payment penalties to align these with interest and late payment penalties for self-assessment.

This measure will have effect from the date of Royal Assent to the Bill.

(See HM Treasury: Budget 2016, paragraph 2.211 and Overview, paragraph 1.78 and 2.55.)

The government has confirmed its intention, announced in the July 2015 Budget, to introduce legislation in the Finance Bill 2016 to empower HMRC to acquire information from online intermediaries and electronic payment providers (see Legal update, July 2015 Budget: key private client tax announcements: Increased resources to enable HMRC to tackle non-compliance, avoidance and evasion).

The government also intends to consult in summer 2016 on the following measures to tackle tax avoidance in the hidden economy:

(See HM Treasury: Budget 2016, paragraphs 1.223, 2.196 - 2.199 and Overview, paragraph 2.61-2.62.)

The government will:

(See HM Treasury: Budget 2016, paragraph 2.204 and Overview, paragraphs 2.51 to 2.53.)

The government has confirmed that the Finance Bill 2016 will include legislation to provide that HMRC's general statutory power to set off amounts that are payable (or to be repaid) by it to a person against any sums payable by that person to HMRC covers Scotland as well as the rest of the UK.

This measure was first announced in the 2015 Autumn Statement, following which it was consulted on (see Legal update, 2015 Autumn Statement and Spending Review: key private client announcements: HMRC's set-off rights to apply in Scotland).

(See HM Treasury: Budget 2016, paragraph 2.80.)

Section 52 of the Finance (No. 2) Act 2015 (section 52) will be amended with the effect that the rate of interest payable on tax-related debts following court action will also apply to Scotland, Northern Ireland and to national insurance contribution (NIC) related debts. This measure ensures that consistent rates of interest apply across the UK on all tax and NIC debts.

For information on section 52, which was introduced following an announcement in the July 2015 Budget, see Legal update, July 2015 Budget: key private client tax announcements: Interest rates for tax-related debts to be simplified.

(See HM Treasury: Budget 2016, paragraph 2.82.)