Today Parliament dissolves ahead of the General Election announced for June 8th.
Last week, due to the need for significant amounts of legislation to go through the parliamentary process at short notice, Parliament decided to remove more than half of the clauses within Finance (No 2) 2017 Bill.
Some of the key clauses dropped, from what was originally the UK’s longest ever finance bill, are as follows.
Matters affecting businesses
- Loss relief reform: additional flexibility for offset against different types of corporate income.
- Transfer of capital losses: fixing capital losses arising on the transfer of a fixed asset to trading stock.
- Tax deductibility of interest: a maximum interest expense of 30% of EBITDA for a company’s accounting period.
Matters affecting individuals
- The reduced tax free dividend allowance: the proposal to reduce an individual’s tax free dividend allowance from £5,000 to £2,000 from April 2018.
- Reforms to the taxation of non-UK domiciled individuals: first mentioned in the Summer Budget 2015 the Government had proposed major changes to the taxation of long term resident, non-UK domiciled individuals.
- Money purchase annual allowances: the reduced money purchase annual allowance, from £10,000 to £4,000; commencing April 2017, designed to reduce the ability for individuals who had withdrawn pension savings from a money purchase scheme from benefiting from additional pension tax relief by recycling their pension savings.
- Making tax digital: the Government has been working towards developing a framework to include UK businesses and property owners maintaining digital accounting and tax records from April 2018.
- £1,000 trading and property allowances: for individuals who receive small levels of rental or trading income.
- Changes to the Social Investment Tax Relief (SITR): Improvements in the investment limits and some measures designed to better target the scheme.
Most if not all of these measures are likely to reappear (whether unchanged or with alteration) and form part of the first finance bill of the new Government in due course.
The Financial Secretary’s statement last week was as follows:
“I will speak briefly, as we have a fair amount to get through this afternoon. Obviously, I shall attempt to address any points that are made during the debate.
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. The Government remain committed to the digital future of the tax system, a principle widely accepted on both sides of the House. We recognise the need for the House to consider such measures properly, as called for by my right hon. Friend the Member for Chichester (Mr Tyrie) and his Treasury Committee. That is why we have decided to pursue those measures in a Finance Bill in the next Parliament, in the light of the pressures on time that currently apply.”
Those potentially affected by measures which have now been dropped, perhaps only temporarily, now face some uncertainty, at least until such time that clarity is forthcoming on the question of whether original timings (i.e. measures that were to take effect from April 2017) will apply to the clauses in question or the effective date becomes 2018 when the new legislation would be enacted.
If you have any questions relating to the impact of the above to you, please contact Jon Kicks or David Buck on 01788 539000.