This is the Finance Act 2017 version of this article. It is relevant for candidates sitting the Advanced Taxation – United Kingdom (ATX-UK) (P6) exam in the period 1 June 2018 to 31 March 2019. Candidates sitting ATX-UK (P6) after 31 March 2019 should refer to the Finance Act 2018 version of this article (to be published on the ACCA website in 2019).
From the September 2018 session, a new naming convention is being introduced for all of the exams in the ACCA Qualification, so from that session, the name of the exam will be Advanced Taxation – United Kingdom (ATX-UK). June 2018 is the first session of a new exam year for tax, when the exam name continues to be P6 Advanced Taxation (UK). Since this name change takes place during the validity of this article, ATX-UK (P6) has been used throughout.
All of the changes set out in the Taxation – United Kingdom (TX-UK) (F6) article (see ‘Related links’) are relevant to ATX-UK (P6). In addition, all of the exclusions set out in the TX-UK (F6) article apply equally to ATX-UK (P6) unless they are referred to below.
This article summarises the additional changes introduced by the Finance Act 2017 which have an effect on the ATX-UK (P6) syllabus. It does not refer to any amendments to the ATX-UK (P6) syllabus coverage unless they directly relate to legislative changes and candidates should therefore consult the ATX-UK (P6) Syllabus and Study Guide for the year 1 June 2018 to 31 March 2019 for details of such amendments.
Please note that if you are sitting P6 (UK) in either December 2017 or March 2018, you will be examined on the Finance Act 2016, which is the legislation as it relates to the tax year 2016–17. Accordingly, this article is not relevant to you, and you should instead refer to the Finance Act 2016 article published on the ACCA website.
THE UK TAX SYSTEM
Tax avoidance and tax evasion
The regime designed to prevent aggressive tax avoidance has been further strengthened by the introduction of the concept of serial tax avoidance.
Those who persistently engage in tax avoidance schemes which are defeated by HMRC are now subject to a regime of increasing penalties. In addition, in certain circumstances, the taxpayer’s details may be published by HMRC.
The scope of income tax
The income tax treatment of overseas income
Finance Act 2017 has repealed the rule whereby only 90% of a foreign pension is taxable if it is assessed on an arising basis. Accordingly, for the tax year 2017–18 onwards, the whole of any foreign pension is now subject to income tax.
Income from employment
Employee shareholder shares
The income tax and National Insurance Contributions reliefs in respect of employee shareholder shares are no longer available to employee shareholders. It is the government’s intention to bring an end to the employee shareholder status in the near future.
As a result of these changes, employee shareholder shares are no longer included within the syllabus.
CAPITAL GAINS TAX
Employee shareholder shares
As noted above, the income tax and National Insurance Contributions reliefs in respect of employee shareholder shares are no longer available to employee shareholders. In addition, the exemption from capital gains tax will no longer be available in respect of the disposal of such shares.
Accordingly, as noted above, employee shareholder shares are no longer included within the syllabus.
The additional nil rate band in respect of residential property
The £100,000 of additional nil rate band for the tax year 2017–18 is described in detail in the TX-UK (F6) article.
Where the value of a deceased’s estate, before deduction of agricultural property relief, business property relief and exemptions, is more than £2 million the additional nil rate band is reduced. The reduction is half of the excess of the value of the estate over £2 million.
The increased nil rate band is available where a residential property is inherited by a descendant. Where there is a lifetime gift of a property to a descendant, the descendant will be treated as having ‘inherited’ the property if, on the death of the donor, the gift turns out to be a gift with reservation. Accordingly, the increased nil rate band will be available in these circumstances.
The following aspects of the residence nil rate band are not examinable:
- The implications of an individual downsizing to a less valuable property or disposing of a main residence prior to death.
- The situation where there is more than one main residence.
A question will make it clear if the residence nil rate band is available. Therefore, you should assume that it is not available if there is no mention of a main residence.
The following articles will be published on the ACCA website later this year.
- Taxation of the unincorporated business – the new business
- Taxation of the unincorporated business – the existing business
- International aspects of personal taxation
- Inheritance tax and capital gains tax
- Trusts and tax
- Corporation tax
- Corporation tax – Group relief
- Corporation tax – Groups and chargeable gains
Written by a member of the Advanced Taxation – United Kingdom (ATX-UK)(P6) examining team