The Finance Act 2004 is an Act

Acts of Parliament in the United Kingdom

An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....

 of the Parliament of the United Kingdom

Parliament of the United Kingdom

The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...

. It prescribes changes to Excise Duties, Value Added Tax

Value added tax

A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...

, Income Tax

Income tax

An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

, Corporation Tax, and Capital Gains Tax. It enacts the 2004 Budget speech made by Chancellor of the Exchequer

Chancellor of the Exchequer

The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...

 Gordon Brown

Gordon Brown

James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...

 to the Parliament of the United Kingdom

Parliament of the United Kingdom

The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...

.

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

Finance Act

In the UK, the Chancellor of the Exchequer delivers an annual Budget speech on Budget Day, outlining changes in spending, as well as tax and duty. The changes to tax and duty are passed as law, and each year form the respective Finance Act...

 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 Legilation is contained within Taxation of Chargeable Gains Act 1992

Taxation of Chargeable Gains Act 1992

The Taxation of Chargeable Gains Act 1992 is an Act of Parliament which governs to levying of capital gains tax in the United Kingdom. Capital gains tax is a tax charged on the increase in the capital value of an asset between purchase and sale of that asset....

.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 ands aims to reduce avoidance of inheritance tax

Inheritance tax

An inheritance tax or estate tax is a levy paid by a person who inherits money or property or a tax on the estate of a person who has died...

 .

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 exactly what type of scheme it was. After the changes a single taxation regime was designed.

The principle of the new regime is that a pension fund will be tax-free provided it is below the life time allowance (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.

Whilst the new regime is simpler the need to provide transitional arrangement for pension scheme members whose existing entitlements exceed the new limits has resulted in the actual implementation being extremely complex.

Inheritance tax

The Act also introduced an income tax

Income tax

An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 regime known as pre-owned asset tax

Pre-owned asset tax

In the United Kingdom, Her Majesty's Revenue and Customs acted against certain IHT schemes by imposing a standalone income tax charge from 6 April 2005. This has become known as pre-owned assets tax . POAT applies where an individual disposes of an asset but somehow retains the ability to use or...

 which aims to reduce the use of common methods of inheritance tax

Inheritance tax

An inheritance tax or estate tax is a levy paid by a person who inherits money or property or a tax on the estate of a person who has died...

avoidance.

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).