Second Finance Bill to be introduced “as soon as possible”
Following the substantial reduction of the Finance (No. 2) Bill 2017 ahead of the June election, the Government has now published a new Finance Bill 2017 and has said that it intends to introduce it “as soon as possible after the summer recess”.
The effect of the new Bill will be to implement policies that were previously dropped from the Finance (No. 2) Bill 2017, including:
- The extension of inheritance tax to UK residential property held through offshore structures by non-UK domiciled taxpayers and trusts.
- The abolition of permanent non-dom status for individuals who have lived in Britain for at least 15 out of the preceding 20 years.
- A reduction in the money purchase annual allowance from £10,000 to £4,000 for individuals who have withdrawn more than 25% from their pension tax-free.
- A reduction in the annual tax-free dividend allowance from £5,000 to £2,000.
- Two new tax-free allowances of £1,000 each for small trades and property businesses.
Some of these changes will be retrospective and will take effect from 6 April 2017.
The Government has also announced that the timetable of its contentious “Making Tax Digital” plan has been relaxed.
MTD would have required businesses and landlords to keep digital records and report quarterly to HMRC. Businesses with turnover over £85,000 were set to start as early as April 2018 with other taxpayers starting at other staging dates.
However, under the new timetable, compliance with MTD will be voluntary for taxes other than VAT until “at least” April 2020.
VAT reporting under MTD will only be compulsory for VAT registered businesses with turnover over the VAT threshold.