Tax  

What you must know about the Finance Bill

£500 advice allowance introduced

Savers can now access £500 from their pension savings tax-free up to three times before the age of 55 to pay for regulated financial advice.

The measure is one of a series of recommendations from the Financial Advice Market Review, an initiative aimed at improving access to advice following the introduction of the pension freedoms.

“While it is early days, the signs suggest demand for using the allowance is likely to be relatively low,” AJ Bell's Mr Selby said.

The government has also resurrected the increase in the employer tax-free exemption for providing advice in the workplace.

The £500 of pension advice for each employee will be tax-free, increased from £150. 

“By more than tripling the advice tax exemption we are hoping this will encourage more employers to provide access to advice for their employees, helping them to make more active and informed choices about saving for retirement,” said Kate Smith, head of pensions at Aegon

 Changes to the non-domiciled tax regime

The Finance Bill contained “significant reforms” to the non-domiciled tax status, according to law firm Harbottle & Lewis.

These changes were also expected before April as announced in the Summer Budget 2015 but delayed due to the general election.

The bill has reduced the threshold for UK resident status to someone who has lived here for 15 years out of the past 20, down from 17.

The Finance Bill 2.0 has also abolished permanent non-dom status, so that those who have lived here for years – and in some cases for their entire lives – pay tax in the same way as UK residents.

Gary Ashford, tax partner at Harbottle & Lewis, said that the Bill also changes the government’s attitude towards mixed funds for non-doms

“Non-domiciled tax payers with mixed funds and non-segregated bank accounts, that is, accounts fed by multiple sources – such as income and capital gains – have to-date had their savings and investment options impacted by complex remittance rules,” he said.

“The Finance Bill opens a two-year window for non-doms to cleanse these accounts and un-mix them, providing greater clarity over taxes, and potentially opening up investment options for new clean capital.

"This is an unsurprising move by the government, perhaps still fearful of post-Brexit capital flight and looking to stimulate inward UK investment.”

No legislation on cold-calling

There had been some speculation that the Bill would include a ban on pensions cold-calling, but this does not appear to be in the bill. 

“This always seemed fairly optimistic given the timescales involved and the fact the government has only committed to protecting savers ‘as soon as Parliamentary time allows,” AJ Bell's Mr Selby said.

He said: “The whole industry now needs to keep the pressure on policymakers to ensure this vital intervention doesn’t get crushed under the debris of the Brexit process.”