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The re-introduction of the Finance Bill
Sarah Hamilton - September 18th, 2017
Aspects of the 2017 Finance Bill (trailed in the March 2017 Budget) were “parked” in the spring due to the announcement of the General Election in June 2017.
On September 8th 2017 the Government released a whopping 345 pages of explanatory notes as introduced into Parliament.
Salient points which may impact on many of you include:-
DIVIDEND NIL RATE FOR TAX YEAR 2018/19 – the amount of dividend income to which the nil rate applies reduces from the current £5,000 per annum to £2,000 per annum with effect from the 2018/19 tax year and thereafter. This measure reduces the tax ’saving’ between someone working through their own company and an employed or self-employed person. Our policy at Richard Sexton & Co is to keep under review, on a case by case basis, the optimum mix of dividend and salary for owner managed companies – this is very sensitive to individual circumstances. More numbers to be crunched with this change!
PENSIONS ADVICE – An income tax exemption to cover the first £500 in any tax year of advice provided to an employee from 2017/18 onwards. Notable here is that the exemption is increased from the previous £150 limit and widened to cover advice regarding the general financial and tax issues relating to pensions.
MONEY PURCHASE ANNUAL ALLOWANCE – reduces from £10,000 to £4,000 per annum from 6/4/17. This will have a negative impact on the tax efficient pension saving opportunities for those who have flexibly accessed their pensions.
TRADING AND PROPERTY ALLOWANCES – With effect from the tax year 2017/18 allowances are introduced to provide full relief for individuals on trading and property income of up to £1,000 each – no need to report “trivial” profits from hobby/ e-bay trading etc.
GRASSROOTS SPORT – a welcome corporation tax deduction for contributions to grassroots sports incurred by companies on or after 1 April 2017. Contributions have to be through “qualifying sport bodies” (i.e recognised) and there is an annual limit of £2,500. Previously deductions could only be made for sponsorship or as charitable donations, so this measure increases the scope for companies to support sports at a local level.
One other positive point to note is that the proposed increase in probate fees which was scrapped ahead of the General Election does not appear to have been resurrected – yet!
All future Budgets are due to be presented in the autumn, starting in 2017 – so we can expect more changes to be announced this November.
As with all tax issues and changes, our team are ready and willing to help you with any queries.