The Finance Act 2004 (c 12) is an Act of the

Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprem ...

. It prescribes changes to

Excise Duties file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...

Value Added Tax A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...

Income Tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Ta ...

Corporation Tax A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed a ...

, and

Capital Gains Tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property. Not all countries impose a c ...

. It enacts the 2004 Budget speech made by

Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of HM Treasury, His Majesty's Treasury. As one of the four Great Offices of State, the Ch ...

Gordon Brown James Gordon Brown (born 20 February 1951) is a British former politician who served as Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 to 2010. He previously served as Chancellor of the Exchequer in Tony ...

to the

. In the UK, the ''Chancellor'' delivers an annual Budget speech outlining changes in spending, tax and duty. The respective year's

Finance Act A Finance Act is the headline fiscal (budgetary) legislation enacted by the UK Parliament, containing multiple provisions as to taxes, duties, exemptions and reliefs at least once per year, and in particular setting out the principal tax rates f ...

is the mechanism to enact the changes. The rules governing the various taxation methods are contained within the various taxation Acts. (For instance Capital Gains Tax Legislation is contained within

Taxation of Chargeable Gains Act 1992 The Taxation of Chargeable Gains Act 1992c 12 is an Act of Parliament which governs the levying of capital gains tax in the United Kingdom. This is a tax on the increase in the value of an asset between the date of purchase and the date of sale of ...

. The Finance Act details amendments to be made to each one of these Acts. Notable changes in the 2004 Act included changes to the taxation of UK pensions and provisions to reduce avoidance of

inheritance tax An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and property) of a person who has died. International tax law distinguishes between an e ...

Pensions Taxation

One of the main changes introduced by the Act was a change in the taxation of UK pensions from 6 April 2006. Prior to the change many different taxation regimes applied to pension schemes depending on the type of scheme. The changes introduced a single taxation regime. The principle of the new regime is that a pension fund will be tax-free provided it is below the

life time allowance Life is a quality that distinguishes matter that has biological processes, such as signaling and self-sustaining processes, from that which does not, and is defined by the capacity for growth, reaction to stimuli, metabolism, energy transf ...

(which was set at £1.5m for the year from 6 April 2006). A second restriction was imposed limiting the maximum annual contribution into a pension scheme. Although the new regime is simpler, the need to provide transitional arrangements for pension scheme members whose existing entitlements exceed the new limits resulted in the actual implementation being extremely complex.

Inheritance tax

The Act also introduced an

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Ta ...

regime known as pre-owned asset tax which aims to reduce the use of common methods of

avoidance.REV BN 40: Tax Treatment Of Pre-Owned Assets

Section 4

The Finance Act 2004 (Duty Stamps) (Appointed Day) Order 2006
(S.I. 2006/201 (C. 3) was made under sections 4(5) and (6).

Section 18

The Finance Act 2004, Section 18 (Appointed Day) Order 2005
(S.I. 2005/2356 (C. 98)) was made under section 18(4).

Section 19

The Finance Act 2004, section 19(1) and Schedule 2, (Appointed Day) Order 2004
(S.I. 2004/1934 (C. 82)) was made under section 19(2)(b).

Section 22

The Finance Act 2004, section 22(2), (Appointed Day) Order 2004
(S.I. 2004/3104 (C. 129)) was made under section 22(6).

Section 53

The Finance Act 2004, Section 53 (Commencement) Order 2004
(S.I. 2004/3268 (C. 147)) was made under section 53(6).

Section 85

The Finance Act 2004, Section 85, (Commencement) Order 2004
(S.I. 2004/1945 (C. 86)) was made under section 85(2).

Section 141

The Finance Act 2004, Section 141 (Appointed Day) Order 2005
(S.I. 2005/123 (C. 6)) was made under sections 141(6) and (7).

Section 291

The Finance Act 2004, section 291, (Appointed Day) Order 2004
(S.I. 2004/1942 (C. 84)) was made under section 291(4).

Section 294

The Finance Act 2004, Section 294 (Appointed Day) Order 2004
(S.I. 2004/2571 (C. 109)) was made under sections 294(4) to (6).

References

External links

* {{UK legislation United Kingdom Acts of Parliament 2004 2004 in economics Tax legislation in the United Kingdom