Significant 2017 tax changes scrapped ahead of the General Election
Following the committee stage debate over the Finance Bill 2017 which took place on Tuesday (25 April 2017) it has been revealed that the Government, following discussions with the opposition, plans to remove the majority of the Bill as they prepare for the forthcoming Election.
The Government had been warned of the risks of rushing through a large number of tax changes without any real parliamentary scrutiny in the run up to the election, including in a recent letter from the Chartered Institute of Taxation (CIOT) which is the leading professional body in the UK for tax professionals.
As a result they appear to have kept only those measures essential to maintain the Government’s revenue raising capacity and other urgent measures, such as anti-avoidance provisions, leaving the remaining measures to potentially be reintroduced post-election when they can be scrutinised at greater length.
It is probably likely that most if not all of the provisions dropped will return in a Bill after the election, regardless of who wins, however these amendments do inevitably raise the prospect of changes being made.
The main provisions which are to be dropped are as follows:
- Reduction of the dividend nil rate band of £5k to £2k with effect from 6 April 2018
- Reduction in the money purchase annual allowance for pensions from £10k to £4k from 6 April 2017 where a taxpayer has already flexibly accessed their pensions
- New simplified cash basis for unincorporated businesses and also for unincorporated property businesses with effect from 6 April 2017, including an increase in the turnover threshold under which businesses qualify to use this basis - from the VAT registration threshold (£85k for 2016/17) to £150,000 (or £300,000 for Universal Credit claimants)
- New trading and property income allowances of £1,000 each per annum from 6 April 2017 under which income received would be tax-free
- Changes to the treatment of carried forward losses for Corporation Tax purposes from 1 April 2017
- Changes to the Substantial Shareholdings Exemption (SSE) for disposals on or after 1 April 2017
- The end of permanent non-UK domiciled status for Income Tax, CGT and IHT for long term UK residents and persons of UK origin from 6 April 2017
- Liability to IHT for UK residential property held indirectly by non-UK domiciled persons via offshore structures from 6 April 2017
- The Making Tax Digital (MTD) legislation requiring many businesses to file quarterly Income Tax and NIC returns from 6 April 2018 in addition to their usual annual tax return
- Penalties for enablers of defeated tax avoidance arrangements with effect from Royal Assent of the Finance Bill
If you are affected by any of these changes, or would like to discuss your tax affairs in general, please contact our Tax Partners Steve Crompton or Chris Barrington on the details below:
Partner - Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
direct dial: 01942 292505
mobile: 07730 436070