Finance Act 2010 what was left out

April 2010

This year’s Finance Act was given Royal Assent on 9 April 2010. The Bill was rushed through to accommodate the closing of Parliament pending the May election.

Furnished holiday let property

One surprising omission in the Finance Act 2010 was legislation to reclassify Furnished Holiday Let Property – in effect from 6 April 2010 it was intended that FHL property be treated the same as other let property.

Accordingly FHL property is still a trade for UK income tax, capital gains tax and IHT purposes and presently retains favorable tax treatment.

Whichever party, or combination of parties, wins the election it is likely that this issue will be revisited. Whether or not any future change will be back dated to 6 April 2010 remains to be seen.

At present we have to consider there is no change!

Other omissions from Finance Act…

Landline duty. Another casualty in the need to get the Bill passed in around 3 hours was the proposed landline duty of 50p per month per line. This was planned for commencement in October 2010, so there is still time for the second Finance Bill to introduce the measure in time for the start date.

PAYE security. The proposal to require security from employers who HMRC consider to be at risk of defaulting on PAYE and related payments has also been dropped. This was not intended to commence until 2011, so there is still time to legislate for the measure to start as planned. Meanwhile, employers late paying their PAYE and NIC from the current tax year will find that they may incur penalties for late payment from May 2010, so employers will need to be ever vigilant not to miss a payment date.

Cider duty. The final lost measure was the plan to increase cider duty by more than the other taxes on alcohol. This was withdrawn, but the measure to reclassify certain strong cider separately was retained – the measure represented as a defence against “yob culture” and “binge drinking” which would always be politically popular.