Emma Ann Hughes  

Finance Bill: What went, what stayed and what will come back

Emma Ann Hughes

Emma Ann Hughes

This week saw the Finance Bill receive a trimming down in order to push it swiftly through parliament before the general election on 8 June.

As a result of the government snipping away at the bill, several of the clauses that were “contentious” and advisers had pre-prepared their clients for - such as the changes to the money purchase annual allowance – were culled.

To make sure you know what action you should take for clients now, we have summarised what stayed, what has gone, and of those which are postponed, what is likely to rise phoenix-like post the general election.

Of those clauses staying, the tax rates for this tax year had to remain, Les Cameron, head of technical at Prudential, pointed out. 

All the provisions related to offshore pension schemes, that is the overseas transfer tax charge and the increase in the amount of foreign pension income taxable from 90 per cent to 100 per cent also remain.

The new rules for salary sacrifice, which came into effect from 6 April 2017 were retained but the new rules for termination payments, which were to come into force from 6 April 2018 have gone.

Indeed perhaps more interesting than what was kept in the Finance Bill were the clauses that were removed. 

The headline removal was the reduction in the money purchase annual allowance from £10,000 to £4,000.

The other big removal was the reduction in dividend taxation allowance from £5,000 to £2,000, albeit this was to apply from 2018 to 2019.

Other measures dropped included: the provisions on “making tax digital”; the ability for those who create disproportionate gains on investment bond gains to have their tax bill reassessed on a just and reasonable basis; the new trading and property income allowances of £1,000; various rules related to non-doms including the reduction in the deemed domicile limit from 17 out of 20 years to 15 out of 20 years; and the pension advice allowance, being the increase to £500 of the income tax exemption for employer funded advice, not the ability to take three lumps sums of £500, which has already been legislated for.

Mr Cameron said the key question is what if anything will reappear. 

When introducing the revised bill to the House of Commons financial secretary for HM Treasury, Jane Ellison MP 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.”

Mr Cameron said: “With purdah having started and the fact it is for the new government to set/confirm the policy means that it is highly unlikely we will have any clarity on what the post election landscape for the planner will look like.”