This Parliament will cease to function at midnight on 3 May, to make way for the General Election on 8 June 2017. This means the Finance Bill 2017 has to be passed by that date, – it can’t be carried over to the new session of Parliament after the election.
To allow the Bill to be passed the Government has agreed to drop a large number of measures, some of which had start dates of 1st or 6th April 2017. Those provisions may be reintroduced in a future Finance Bill, if the new Government so wishes. This is a brief summary of how some of those abandoned measures may affect your clients.
Making tax digital
The law to implement MTD has been cut out of the Finance Bill 2017, but that doesn’t mean the MTD project has been scrapped. It is possible that the timetable to roll-out MTD may be changed, although HMRC hasn’t made an announcement about any further delay.
In the meantime, we will review our client base. Assess how much help each client will need with recording and reporting accounting information electronically. Also check how many of our unincorporated clients have annual business plus rental income in excess of £85,000, and thus will be in the first group to report under MTD.
A new cash basis for individual landlords with turnover under £150,000 was due to apply from 6 April 2017. That is apparently now on ice. The few transactions already recorded since that date are unlikely to cause many problems, but keep this under review.
Property and trading allowances
Two new allowances of £1,000 each were to apply from 6 April 2017, as we set out in our newsletter on 6 April 2017. Clients need to keep records of all the income they receive and the related expenses.
If we have non-dom clients we will have been working with you for months to prepare for the new deemed-domiciled regime that was due to apply from 6 April 2017, and now may not. Clients who sold assets around 6 April to fit in with rebasing may have realised a capital gain unnecessarily. Those who took advantage of cleansing of foreign bank accounts may have moved money into the UK, which they thought was not taxable, which will now be taxable.
An expanded tax exemption for up to £500 pensions advice given to employees and former employees was to apply from 6 April 2017. This advice may already have been given on the understanding it was tax free.
Where an individual has already drawn taxable pension benefits, their subsequent pension contributions are capped by the Money Purchase Annual Allowance (MPAA). These individuals won’t know how much pension contributions they can make in 2017/18 as MPAA was set to reduce from £10,000 to £4,000 on 6 April 2017.
Businesses expected to claim 100% first year capital allowances on electric vehicle charging points installed from 23 November 2016 to 31 March 2019. These allowances may not now be available.