The Government has dropped over half of the measures announced in the April Budget from the finance bill in order to rush the legislation through Parliament ahead of the June 8th general election. With Parliament going to recess on May 3rd, it was rushed through in under 2 hours. The Bill, which would have been the longest in history, was reduced from 135 to just 63 clauses, to allow MPs more time to debate the more controversial measures once the new government is formed.
The clauses dropped include the fall in the dividend allowance for shareholders from £5k to £2k, changes to tax legislation for non-doms and the trade and rental allowance of £1k each. Perhaps the most high-profile clause to be dropped from the bill is the controversial ‘Making Tax Digital’ plans, which would require millions of companies, businesses, and landlords to keep digital records and send quarterly updates to HMRC. Many already believed the Making Tax Digital regulations were being rushed through to the detriment of small business. It could be that the delay may allow debate but there remains a large element of uncertainty as to when or even if the measures will be introduced. If the original dates still apply the time scale is getting even tighter.
Many already believed the Making Tax Digital regulations were being rushed through to the detriment of small businesses. It could be that the delay may allow debate but there remains a large element of uncertainty as to when or even if the measures will be introduced. If the original dates still apply the time scale will get even tighter. The Chartered Institute of Taxation has called on The Government to “clarify whether they intend the original timings (with many measures in effect from the start of April 2017) to apply to all the clauses dropped or whether some will have their introduction delayed until a later point” (Full statement from CIOT).
Tracey Watts, tax partner at Albert Goodman commented that “Whilst we would welcome the increased scrutiny, informed debate and discussion that the delay might allow, the level of uncertainty it brings will prove a challenge for us and our clients. Making Tax Digital represents the biggest change to tax and accounting administration in a generation and currently we do not understand if the measures will come in at the next Finance Bill, post-election, be deferred until the Autumn Budget, or be dropped altogether. This level of uncertainty is unacceptable”
Should the current Government be re-elected, it is possible that they will re-introduce most, if not all, of the measures removed from the Bill. The question may be not if, but when, these measures will be re-introduced. Until then, we will watch developments closely and keep our clients informed.