Elections, Budgets and Bills – what’s next?
The events of the first half of the year have left many Budget tax measures in limbo.
When Philip Hammond delivered his first Spring Budget on 8 March, the UK political world looked very different from how it looks today. It had not changed by the time the Finance Bill – the longest ever – arrived 12 days after his speech. Then, on 18 April, Theresa May announced a snap general election and with that predictability started to disappear.
One of the first victims was the Chancellor’s super-sized Finance Bill. There was no way the Bill could be squeezed through parliament in the time available before Westminster shut down, so about 80% of it was dropped. Among the measures initially cut were:
- The reduction in the money purchase annual allowance from £10,000 to £4,000. This could affect your retirement planning if you both draw pension benefits and you (and/or your employer) continue to make pension contributions. The measure was originally due to take effect from 6 April 2017 and the government has confirmed this remains the start date.
- The cut in the dividend allowance from £5,000 to £2,000, which is still likely to start from next tax year (2018/19). If you are a higher rate taxpayer, this could cost you nearly £1,000 in extra tax on your dividends.
The legislation culled from the original Finance Bill has not gone away, however, and will re-emerge in a new Finance Bill expected imminently.
As if that were not enough uncertainty, the Chancellor has also confirmed his original schedule of an Autumn Budget. This marks a shift from the previous pattern of Spring Budgets and Autumn Statements and means another Finance Bill should follow late in the year. The Autumn Budget should give the first indication of how government tax policy has changed – if at all – in response to the election result.
The uncertainty about what tax legislation will be introduced and when it will become effective makes it all the more important that you ask for our updated advice before taking any financial action. It could also mean that the only sensible advice we can give in some areas is ‘wait and see’.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.