Measures previously announced in December 2010 for the 2011 Finance Bill include:

Personal tax

No changes to tax rates but new allowances and threholds for:

Employer supported childcare

New measures affect childcare vouchers and childcare schemes:

  • To remove the obligation on employers to make Employer Supported Childcare schemes delivered through salary sacrifice or flexible remuneration arrangements available to all employees.
  • To ensure that the level of tax relief on childcare vouchers and directly-contracted childcare provided through employer-supported childcare schemes will be the same for all taxpayers.

Furnished holiday lettings

See Furnished holiday letting: update for changes to

  • The qualifying lettings and availability periods
  • Restriction of sideways loss relief

Gift aid

  • Changes to the substantial donors rules to counter known abuse of charity tax reliefs.


  • Restriction on the amount of tax relief that is available by reducing the annual allowance from 2011 and the lifetime allowance from 2012.
  • Pensions annuitization: to remove rules from April 2011 that currently create an obligation for members of registered pensions schemes to secure an income by age 75.
  • Ses Pensions: tax rules and planning

Corporate tax 

  • The small profits rate to reduce the small profits rate of corporation tax to 20 per cent from 1 April 2011
  • The main rate of corporation tax continues to reduce by 1% per year, but with an extra 1% making to 26% in 2011/12 and 25% from 1 April 2012.

Associated companies

Legislation to ensure that companies are only held to be associated where the substantial commercial interdependence exists between them.

ESC C16 - winding up a company

See ESC C16: the end in sight?

This is not a Finance Bill measure, but a clump of existing Extra Statutory Concessions are due to be enacted by Treasury Order (that means by Statutory Instrument, which is secondary legislation). In the case of ESC C16 the existing concession is going to be completely changed, so that it will only apply when £4,000 or less will be distributed on striking off a company. As this is done by secondary legislation it appears that this will not be debated in parliament.

Capital allowances

From 2012:

  • The writing-down allowances reduced to 18 per cent
  • The special rate pool to 8 per cent
  • The annual investment allowance to £25,000

Larger companies and foreign

  • Interim controlled foreign companies (CFCs) reform to make the current rules easier to operate ahead of the full reform planned for Finance Bill 2012
  • Taxation of foreign branches: an opt-in exemption from corporation tax for the profits of foreign branches of UK companies.
  • Bank Levy: draft legislation published ahead of the permanent Bank Levy from 1 January 2011.

Corporate capital gains simplification

Legislation is published to:

  • remove some existing restrictions on the use of capital losses within a group of companies after acquisition of a business;
  • replace a complex set of anti-avoidance rules with a clearer purpose-based rule; and
  • modernise the degrouping charge rules, in particular how they interact with the substantial shareholdings exemption, which will make it easier for companies to plan acquisitions and disposals of group companies.


Academies VAT refund

Legislation will be introduced to allow academies to recover VAT on a similar basis to local authority maintained schools.

Business samples
Legislation will be introduced to ensure that where businesses provide samples of their products free of charge to individuals for marketing purposes, none of the samples are liable to VAT.


Group mismatches

Legislation will be introduced to ensure that groups of companies cannot use loan relationships or derivative contracts to generate profits or losses purely as a result of accounting asymmetries. An interim measure has been introduced with immediate effect to prevent tax losses from new schemes.

Loan relationships avoidance: derecognition
Legislation will be introduced to prevent the avoidance of corporation tax in respect of loan relationships and derivative contracts where amounts are not fully recognised for accounting purposes.

Disguised remuneration
New rules to ensure that remuneration is not avoided or deferred through the use of trusts or other intermediaries, including Employee Benefit Trusts and Employer Financed Retirement Benefit Schemes (EFRBS).

Legislation will be introduced in Finance Bill 2011 to ensure that where a third party makes provision for what is in substance a reward or recognition or loan in connection with the employee’s employment, an income tax charge arises. This will be based on:

  • a sum of money made available; or
  • on the higher of the cost or market value where an asset is used to deliver the reward or recognition.

For example, where the asset in question is transferred or otherwise made available for an employee’s use and benefit as if the employee owned the asset. The amount concerned will count as a payment of employment income and the employer will be required to account for PAYE accordingly. 

Functional currency switch schemes

Legislation will be introduced to counter avoidance involving changes in the functional currency of an investment company. At the same time, the legislation will also introduce the option for investment companies to be able to elect for a functional currency for tax purposes other than that in the accounts.

VAT supply splitting

Legislation will be introduced to cancel the tax advantage currently enjoyed by businesses that supply services and arrange for different suppliers to supply printed matter which is connected to those services. 

Powers consultations:

  • Financial securities for PAYE: proposals to allow HMRC to require a security from employers for PAYE and NICs that is seriously at risk.
  • Data-gathering powers proposals to modernise and simplify HMRC’s information gathering powers.

Other proposed Finance Bill 2011 measures

  • Junior ISA: for a new tax-free children’s saving accounts.
  • Climate change levy reform
  • Taxation of gaming machines a new duty on the profits from the playing of prize games on machines. The current Amusement Machine Licence Duty (AMLD) will be brought to an end and the exemption from VAT for betting and gaming will be extended.