Since the Enterprise Act 2002 abolished what was known as Crown Preference in the UK, tax claims have ranked as ordinary unsecured debts on insolvency.
In the October 2018 budget it was announced that certain tax debts would be moved back up the insolvency hierarchy to rank as secondary preferential debts. These debts would rank after employees' preferential claims but, importantly, before claims of floating charge holders.
In the March 2020 budget it was announced that these changes, which were originally scheduled to commence from 6 April 2020, would instead take effect from 1 December 2020. Legislation to effect the changes was then included in the Finance Act 2020, and subsequent supporting regulations.
