Finance Bill 2022 (official title Finance (No.2) Bill 2021-22) continues its progress through the parliamentary process and has now reached the House of Lords with all stages due to take place tomorrow 22 February.
The House of Lords does not have the power to make any amendments to the Bill as it is a ‘money bill’ and therefore these stages are a formality only. Royal Assent will take place once the stages in the House of Lords have been completed, however no date for this has been published.
Last month, HMRC published details of explanatory Notes and Tax Information and Impact Notes for government amendments and new clauses at the Bill’s Report Stage. Important amendments were made at report stage to the rules for calculation of transition profit as a result of the change to basis period. This means that the tax arising on transition profits will now be part of Step 4 of the income tax calculation which allows specific reliefs to now be deducted at Step 6. However, the transition slice is still excluded at Step 2, so is not part of net income in 2023/24.
The Bill also now contains of a new public interest business protection tax in response to Government concerns about failing energy companies. The tax is designed to deter the monetisation of assets from critical public interest businesses. At present, the tax is scheduled to be in place for one year only but can be extended into 2025.
The tax is intended to be charged on profits which could arise where a business undertakes steps to realise a valuable asset for its own and its shareholders’ benefit, which as a result, precipitates or exacerbates the collapse of licensed gas and energy supplier businesses. It may be extended to other critical public interest businesses by future regulations.
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