Finance Act 2016
What this means for your business
- Applies to
- United Kingdom
- On this page
- 9 compliance obligations, 2 practical guides across 2 topics
What you must do
9 compliance obligations under this legislation — 2 can result in imprisonment.
Management duties 2
Allocate apprenticeship levy allowance for connected companies
If your business is part of a group of connected companies, you must work out how much of the £15,000 apprenticeship levy allowance each company in the group gets for the tax year. The total for the whole group must always add up to £15,000 and, once set, the allocation cannot be changed unless HMRC steps in.
Allocate apprenticeship levy allowance within charities unit
If your charity is linked with other charities and together you form a “charities unit”, you must work out how much of the £15,000 apprenticeship‑levy allowance each charity gets for the tax year. The total of all allocations must add up to exactly £15,000 and, once agreed, you cannot change the amounts later unless HMRC steps in.
Payments and fees 2
Do not deduct apprenticeship levy from employee wages
If your business is liable for the apprenticeship levy you must pay it straight to HMRC – you cannot take the levy out of your staff’s pay or try to recover it from them. Make sure your payroll system is set up so no levy appears as a deduction on payslips.
Pay the apprenticeship levy and submit required returns
If you employ staff who earn more than £3,000 a year, your business must pay an apprenticeship levy of 0.5 % of eligible pay to HMRC. You also need to submit periodic returns that show how much levy you calculated and keep records of those calculations and payments.
Offences and prohibitions 2
Enable offshore tax evasion or non‑compliance
Unlimited fineIf you encourage, assist or otherwise facilitate another person to carry out offshore tax evasion or to breach offshore tax rules, and that other person is subsequently convicted (or is liable to a civil penalty) and the conviction/penalty is final, you become liable to a monetary penalty. The penalty is the greater of 100 % of the revenue lost (or, for certain asset‑move cases, 50 % of the lost revenue) or £3,000. There is no imprisonment and the sanction is civil, not criminal.
Mix aqua methanol with prohibited substances
7 years imprisonmentIf you mix aqua methanol that has excise duty paid with biodiesel, bioethanol, bioblend, bioethanol blend or hydrocarbon oil, you commit an offence. The offence arises whether you intentionally use the mixture yourself or supply it knowing it will be mixed. Conviction can lead to up to 7 years’ imprisonment and an unlimited fine (or up to 12 months’ imprisonment and a fine of up to £20,000 or three times the value of the methanol on summary conviction), and the product will be liable to forfeiture.
Reporting and filing 3
Make written election for EIS/VCT tax treatment and notify parties
If you want the special tax election for Enterprise Investment Scheme (EIS) or Venture Capital Trust (VCT) shares issued between 18 Nov 2015 and 5 Apr 2016, you must put the election in writing, have a director sign it, include a statement of the election in your ITA 2007 compliance statement, and send a copy to every company that received your shares. Once made, the election cannot be revoked.
Provide apprenticeship levy information to service providers and HMRC
51 weeks imprisonmentIf your business is liable for the apprenticeship levy and you use a payroll or other third‑party service to make the payments, you must give that service provider the details it asks for about each levy payment. The provider then has to forward the information to HMRC and keep it confidential, unless HMRC requests further data.
Provide information to HMRC when notified about a tax advantage
If HMRC (the Commissioners) issue you a notice asking for details about a tax advantage your business claims, you must supply the requested information in the form they specify and within the timeframe set in the notice. Failing to do so could lead to enforcement action.
Penalties for non-compliance
3 penalties under this legislation. 2 can result in imprisonment. 3 carry an unlimited fine.
Mix aqua methanol with prohibited substances
Unlimited fine and/or 7 years imprisonment
Fail to give notice of offshore tax liability
Unlimited fine and/or 51 weeks imprisonment
Enable offshore tax evasion or non‑compliance
Unlimited fine
Practical guidance
Our guides explain how to comply with the requirements above.
Apprenticeship Levy for large employers
Mandatory 0.5% payroll levy for employers with £3 million+ annual pay bill, how to use levy funds for apprenticeship training …
Patent Box: reduce Corporation Tax on patented profits
How the Patent Box regime reduces the effective Corporation Tax rate to 10% on profits derived from patented inventions. Covers …
Sections and provisions
216 classified provisions from this legislation.
Duties 7
- s.30 EIS and VCTs: election
- s.101 Connected companies of them is entitled
- s.102 Connected charities of them is entitled
- s.105 Assessment, payment etc
- s.107 Real time information
- s.109 No deduction in respect of levy to be made from earnings
- s.180 Powers to obtain information about certain tax advantages other information which relates
Offences and penalties 4
Powers 4
Definitions 21
- Schedule 2 Sporting testimonial payments
- Schedule 4 Pensions: lump sum allowance and lump sum and death benefit allowance : transitional provision
- Schedule 10 Hybrid and other mismatches
- s.14 Travel expenses of workers providing services through intermediaries
- Schedule 24 Tax advantages constituting the grant of state aid
- s.26 Relief for finance costs related to residential property businesses
- s.32 Income tax relief for irrecoverable peer-to-peer loans
- s.35 Distributions in a winding up
- s.81 Commencement and transitional provision: sections 76, 77 and 80
- s.95 Inheritance tax: victims of persecution during Second World War era
- s.99 Charge to apprenticeship levy
- s.100 A person's pay bill for a tax year
- s.103 Anti-avoidance
- s.120 General interpretation
- s.170 Rate of interest applicable to judgment debts etc: Scotland
- s.171 Rate of interest applicable to judgment debts etc: Northern Ireland
- s.183 Qualifying transformer vehicles
- s.190 Interpretation
- Schedule 8 Tax relief for production of orchestral concerts orchestral concert broadcast
- Schedule 12 Disposals of residential property interests: gains and losses RPI disposal the disposed of interest the relevant fraction
- ... and 1 more definitions
Exemptions 16
- Schedule 18 Serial tax avoidance
- Schedule 22 Asset-based penalty for offshore inaccuracies and failures
- s.37 Income-based carried interest
- s.51 Loans to participators etc: trustees of charitable trusts
- s.68 Taking over payment obligations as lessee of plant or machinery
- s.77 Corporation tax: transactions in UK land
- s.79 Income tax: transactions in UK land
- s.89 Employee shareholder shares: disguised fees and carried interest
- s.91 NRCGT returns
- s.111 Records
- s.121 Regulations
- s.130 SDLT higher rate: acquisition under regulated home reversion plan
- s.141 Insurance premium tax: standard rate
- s.158 General anti-abuse rule: penalty
- s.179 Raw tobacco approval scheme
- Schedule 16 Property authorised investment funds and co-ownership authorised contractual schemes