Impact of the General Election on 2017 Finance Bill proposals
Sarah Hamilton - May 15th, 2017
Theresa May gave notice on 18th April 2017 that there is to be a General Election on 8th June 2017. While this may have been a bolt from the blue that sends the political world into a frenzy, it has also had a knock on effect on some of the measures recently announced as part of the 2017 Finance Bill, which have now been put on hold. This is due to timescales of Parliamentary process, and it is expected that most elements will be re-enacted in the Autumn of 2017 – depending on the outcome of the election.
Items dropped include:-
- The reduction of the tax free DIVIDEND allowance from £5,000 to £2,000 per annum has been cancelled.
- The reduction of the MONEY PURCHASE annual allowance (the money you can recycle into your pension after you have started to draw pension), from £10,000 to £4,000. The £500 pension advice allowance has also failed to make it through Parliament as yet.
- The new PROPERTY AND TRADING allowances which were set to offer individuals a new £1,000 additional income tax allowance for minor property income / pocket money from eBay trading etc. have not been made law.
- Controversial changes to PROBATE fees (which threatened gigantic increases in fees due by larger estates) have also been scrapped in the run up to the General Election. The Ministry of Justice has said it would be up to the newly elected government to decide whether or not to reinstate the changes.
Making Tax Digital
Most significantly, current proposals in respect of MAKING TAX DIGITAL (MTD) have also been dropped for the time being.
Theresa May’s election announcement came on the same day that the Treasury Committee reviewed requests from professional bodies representing Tax Advisors and Accountants to delay the roll out of MTD until HMRC could provide more clarity on software and IT availability issues.
There has been general concern about the lack of detail of working software which would integrate spreadsheets into HMRC’s quarterly reporting system. It is therefore a relief to many that due to time pressure MTD has been removed from Finance Bill 2017.
We are not sure exactly how MTD will re-appear in the new Parliament, or whether HMRC will push back the implementation Date of 1st April 2018 for unincorporated businesses with a turnover in excess of the VAT threshold (£85,000) – nor will we know until after the General Election.
Our view at Richard Sexton & Co is that sooner or later MTD will become a reality for the vast majority of our clients, and we intend to be fully prepared to give strong support to all our clients as the digital world, and cloud based systems, becomes ever more an integral (and beneficial) part of accounting and taxation for businesses and individuals.
We will therefore continue to adopt digital accounting practices where appropriate to ensure that we are ahead of the game as implementation of the Revenue’s plans becomes mandatory over the coming years.
As always, please contact one of our team if you want to know more about MTD and its likely impact on your business or tax affairs.