Another General Election, another Finance Bill forced through Parliament with no scrutiny. This is not the way tax law should be set. Of course, the last time this happened in 2015 the Government was forced to amend numerous elements of the legislation it had forced through because it didn't work, but clearly no-one has learned those lessons.
On the up side, much of the Finance Bill legislation was dropped. However, this leads to additional confusion; for example, the changes for non-domiciles, consulted on for several years, wasn't passed, so will the changes apply for 2017/18 or not?
Making Tax Digital
The MTD legislation was also dropped but don't get too excited. All of the legislation that was dropped is likely to be re-introduced in a second Finance Act later in the year, although based on previous experience this may not be until late autumn. More detail should be available once the new Government gives details of its legislative programme in the Queen's Speech on 19 June.
Proposals Dropped In Finance Bill
Some of the significant proposals dropped include:
- the new rules on corporate loss relief and corporate interest restrictions, along with the changes to the substantial shareholding exemption;
- the new 'non-dom' rules, the restriction in the money purchase annual allowance to £4,000 per annum (from £10,000) and the reduction in the dividend allowance from next April to £2,000 per annum (from £5,000);
- the proposed changes to termination payments;
- avoidance rules in relation to appropriations to trading stock;
- the new 'requirement to correct' in respect of undisclosed offshore tax non-compliance; and
- penalties for enablers of defeated tax avoidance schemes.
The provisions introducing the rules on optional remuneration arrangements (salary sacrifice) provisions and reforming the so-called 'IR35' rules for off-payroll working in the public sector remained were enacted, as were the provisions on overseas pension transfers and foreign pension scheme payments. There were also, however, a number of amendments to the text of the Bill, which were reflected in the final legislation enacted. These included an amendment to the off-payroll working in the public sector provisions to restrict the definition of public authority.
Finance Act 2017
All documents related to the bill and other explanatory notes are available here.