The Finance (No. 2) Act 2015 received the Royal Assent on 18 November 2015. The Act provides that the basic, higher and additional rates of income tax will not increase above their present levels in this parliament (i.e. until the next general election scheduled for May 2020). In addition to this income tax lock there is also a VAT lock which provides that the standard and reduced rates of VAT will not rise. The relevant VAT provisions will be locked so they cannot be used to decrease the scope of the zero or reduced rates during the VAT lock period.

The Act contains some adjustments to the provisions on venture capital trusts (VCTs), the Enterprise Investment Scheme (EIS) and Enterprise Management Incentives (EMIs). One important change is that farming activities carried on outside the UK will no longer be qualifying activities for the purpose of these schemes. This applies to any shares issued or options granted after the date of Royal Assent.

Some changes to the EIS are to bring the provisions into line with the Treaty on the Functioning of the European Union (TFEU) and they generally take effect from the date of Royal Assent. The Act also repeals the requirement for a company to have spent at least 70% of funds raised under the Seed Enterprise Investment Scheme (SEIS) before receiving an investment under the EIS or from a VCT.

The Act makes changes to some provisions on inheritance tax on settled property, making some changes to the calculation of the ten yearly charge and the exit charge where there are “same day additions” across a number of trusts. Also, the value of non-relevant property is left out of computations from the date of Royal Assent.

The Act also makes some changes to the provisions on loan relationships and derivative contracts. Most will take effect from 1 January 2016 but the corporate rescue rules and anti-avoidance provisions take effect from the date of Royal Assent.