Coalition Government Budget 2010 – Finance Bill publishedTuesday, July 13th, 2010
The Finance Bill has commenced its Parliamentary stages. The provisions announced in the June 2010 Budget that are of payroll relevance in the Bill are explained below. References to the “Finance Act 2010” are to the Act that gave effect to the Labour government’s March 2010 Budget. The Coalition government’s Finance Bill, when enacted, will be known as the Finance (No. 2.) Act 2010.
- Clause 5 provides HM Treasury with the powers to repeal the provisions in the Finance Act 2010 to introduce the high income excess relief charge from April 2011. This charge was the Labour government’s approach to limiting income tax relief on pension contributions for high earners. The Coalition government’s approach is to reduce significantly the annual allowance and a consultation on this proposal is expected. The high income excess relief charge will only be repealed when the alternative method is enacted and the Finance Bill sets a deadline of 31 December 2010 for the replacement legislation.
- Clause 6 and Schedule 3 contain detailed provisions to allow individuals who reach age 75 without having used their pension fund to purchase an annuity or otherwise secure a pension income to delay any decision up to age 77. The government intends to introduce new rules in 2011.
The following provisions, which were expected to have been included in the Finance Act 2010, do not currently appear in the new Finance Bill:
- extension of the application of the Seafarer’s Earnings Deduction to EU and EEA residents
- extension of Enterprise Management Incentives to foreign businesses with a permanent establishment in the UK
- removal of the “generally available” condition for the limited tax exemption for the provision of directly-contracted childcare or childcare vouchers to low-paid employees in conjunction with salary sacrifice schemes.