Finance Bill shrinks in the parliamentary wash-up as PM announces snap election
The announcement of a snap general election to take place on 8 June 2017 had an immediate impact on some of the most eye-catching announcements from the Spring Budget, with the parliamentary wash-up seeing key clauses dropped from the Finance Bill.
Making Tax Digital, as well as changes to the Money Purchase Annual Allowance and Dividend Tax Allowance all fell victim to the need to secure the passage of the Bill through Parliament before it was dissolved ahead of the election.
Confirming the move to MPs, Financial Secretary to the Treasury, Jane Ellison said: “The Bill is progressing on the basis of consensus and therefore, at the request of the Opposition, we are not proceeding with a number of clauses.
“However, there has been no policy change. These provisions will make a significant contribution to the public finances, and the Government will legislate for the remaining provisions at the earliest opportunity, at the start of the new Parliament.”
Making Tax Digital, which should it proceed will see most businesses, landlords and self-employed people having to report to HM Revenue & Customs (HMRC) on a quarterly basis, has proven highly controversial within the accountancy profession.
Concerns raised include the potential costs to businesses of putting the software in place to comply with the measures and the tight timetable for implementation.
However, the Government seems undeterred, with Ms Ellison telling MPs: “The Government remain committed to the digital future of the tax system, a principle widely accepted on both sides of the House.”
Plans to cut the tax-free dividend allowance also failed to make the cut in Parliament. This would have seen the allowance cuts from £5,000 to £2,000 from April 2018.
The reduction in the Money Purchase Annual Allowance from £10,000 to £4,000 announced at the Spring Budget had taken effect on 6 April 2017, but was dropped from the bill.
It would have further restricted the amount of relief on pension contributions, where an individual has flexibly accessed their pension pot.
The Chartered Institute of Taxation (CIOT) says the clauses removed from the Finance Bill have seen it shrink from 762 pages to approximately 140.
The organisation’s president, Bill Dodwell, said: “If the original bill was the weight of a family sized turkey, the act which gains royal assent later this week will be more of a ‘turkey crown for one’ portion. However, going through 140 pages of legislation in barely two hours is still less than ideal. Hopefully this will be last time there is a need for such a compacted process.”
Other measures which were dropped from the Bill before it became the Finance Act 2017 include:
- the new £1,000 trading and property allowances;
- the pension advice allowance; several reforms to the status of non-doms, including reducing the deemed domicile limit by two years to 15 of 20 years;
- the increase in income tax exemption for employer-funded pension advice to £500; and
- the right of people who make disproportionate gains on investment bonds to request for their tax bills to be reassessed on a just and reasonable basis.
- National Living Wage to rise in April 2019
- Entrepreneurs’ Relief rules to be tightened
- Research reveals Inheritance Tax hotspots across the UK
- R&D Tax Credit system to be reviewed in light of fraudulent claims
- HM Revenue & Customs to review and rework some 2016-17 self-assessment tax returns following error
- Payee names to be required for bank transfers in effort to combat fraud and errors
- Public pilot of Making Tax Digital for VAT opens
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